[Congressional Record Volume 150, Number 130 (Monday, October 11, 2004)]
[Extensions of Remarks]
[Page E1909]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   CONFERENCE REPORT ON H.R. 4520; AMERICAN JOBS CREATION ACT OF 2004

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                               speech of

                          HON. ANDER CRENSHAW

                               of florida

                    in the house of representatives

                       Thursday, October 7, 2004

  Mr. CRENSHAW. Mr. Speaker, I rise today to express my strong 
opposition to an unfair tax increase contained in the conference report 
of H.R. 4520, the American Jobs Creation Act of 2004.
  Overall I believe this bill is well crafted and contains a great 
number of provisions that will significantly benefit individuals, 
businesses and other job creators in this Nation. I commend the Ways 
and Means Committee and Chairman Bill Thomas for their hard work and 
determination on this complex and vital piece of legislation.
  I must, however, express my strong opposition to an unfair tax 
increase for Florida's cigar manufacturers. A provision added in the 
final hours of the conference will force cigar makers to pay for a 
tobacco buyout that has nothing to do with the kind of tobacco used in 
cigars. This new provision--which was not included in either the House 
or Senate-passed versions of the American Jobs Creation Act--amounts to 
a $282 million tax increase and Florida companies will pay more than 75 
percent of this new tax.
  Mr. Speaker, well over 95 percent of the tobacco grown in this 
country is produced under a federal price support program. Cigar 
manufacturers do not use the type of tobacco produced under this 
program. According to industry reports, 99.9 percent of all quota 
tobacco produced in the United States in 2002 was used by someone other 
than a cigar manufacturer. Yet under the American Jobs Creation Act, 
cigar makers are being forced to finance the phase-out of this 
government support program. Assessing cigar makers for the tobacco 
buyout fails any test of fairness. We should not increase taxes on an 
industry by imposing so-called ``assessments'' unless the new tax has 
something to do with the purpose of the new program.
  To make matters worse, the cigar tax assessments appear to be imposed 
unfairly within the cigar industry. The Internal Revenue Code 
distinguishes between ``small'' cigars and ``large'' cigars. Unlike 
cigarettes, cigars come in a wide variety of shapes, sizes, and 
weights. The tax code recognizes these distinctions. A 10 cent cigar is 
not taxed the same as a $15 premium cigar. Under the tax code, a 
premium ``large'' cigar might pay an excise tax amount that is 25 times 
greater than a small cigar. Small cigars make up a small percentage of 
sales in the overall market, and about 2 percent of all excise taxes on 
cigars are collected from small cigars. Yet under the American Jobs 
Creation Act, small cigar manufacturers will pay about 35 percent of 
the new assessments, unless the Secretary of Agriculture--when writing 
the rules--recognizes this distinction between small and large cigars. 
Otherwise, small cigar manufacturers will be assessed at a level that 
is far out of proportion with both their current excise tax burden and 
their overall market share.
  Mr. Speaker, this is supposed to be a jobs bill, but ironically, I 
believe it will eliminate tobacco jobs in my state. For the Florida 
cigar industry, this provision is a job killer. I would hope this issue 
could be revisited in the future and a correction be made to reverse 
this unfair tax increase.
  I look forward to working with the Secretary of Agriculture to fix 
this issue and ensure the tax is assessed on those manufacturers 
actually utilizing program tobacco. Since there is no per unit 
assessment level for cigars set in the bill, I trust the Secretary Will 
recognize the inherent differences in small and large cigars and set 
the assessment based on the market share of the product.

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