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House Set To Pass SCHIP Bill Feared By Cigarmakers

Posted Sep 25, 2007 by Billy House, Tribune Washington Bureau

Updated Sep 25, 2007 at 06:01 PM

Despite a presidential veto threat, the U.S. House is set to approve tonight a $35 billion, five-year expansion of children’s health insurance that would increase cigar taxes to as much as $3 per cigar.

With a Sunday expiration looming for the current State Children’s Health Insurance Program (SCHIP), Senate and House negotiators reached a deal Monday night on a final version of the bill to renew and expand the program.

That agreement, to be voted on in a few minutes contains an apparent legislative setback for Tampa’s freshman Democratic Rep. Kathy Castor—raising the cap on cigar taxes to nearly triple the level she had fought for.

Castor has made no secret that she puts the needs of children over those of cigar manufacturers in her district and supports renewing and expanding SCHIP. But after outcries from Tampa Bay area cigar manufacturers, she insisted that she also worked hard to lower the initially proposed tax increase.

The initial proposal would have raised the current 5-cent-a-cigar tax to 53 percent of the manufacturing costs, with a cap at $10 each. With the help of fellow Florida Democratic Rep. Kendrick Meek, Castor was able to cut that to 33 percent with a $1 cap in the House bill.

But in the Senate, Florida Democratic Sen. Bill Nelson was less successful than Castor in persuading colleagues to lower the cap, and Monday night’s agreement with the Senate says 52.9 percent and a $3 cap.

Even a $3 cap carries “dire consequences” for the industry, says Norman Sharp, president of the Cigar Manufacturers Association of America. He said his group supports improving children’s health care, but hopes Bush will veto the measure.

Castor could not immediately be reached for comment Tuesday.

Bush has said he intends to veto the bill because of its cost, but tonight’s vote will indicate whether there’s enough support in the House to override a veto.