[Congressional Record Volume 153, Number 114 (Tuesday, July 17, 2007)]
[Senate]
[Pages S9474-S9475]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. LINCOLN:
  S. 1799. A bill to amend the Internal Revenue Code of 1986 to apply 
rate parity to the excise tax on small cigars and small cigarettes, and 
for other purposes; to the Committee on Finance.
  Mrs. LINCOLN. Mr. President, I rise today to discuss an issue of 
enormous importance the health and safety of our children. Although we 
have made great strides in recent years to combat youth cigarette 
smoking, a few in the tobacco industry have found a loophole which 
allows them to classify certain cigarettes as ``small cigars'' thereby 
avoiding higher cigarette taxes that

[[Page S9475]]

have been implemented, at least in part, to deter children from 
smoking.
  The trend of small cigar use is growing at an alarming rate. Small 
cigar sales for 2006 were at the highest level ever reported and have 
increased by more than 100 percent since 1998. This increase has 
occurred at the exact same time that cigarette usage has decreased. 
More specifically, use of cigars among youth is rising. Multiple 
studies over the last few years have shown that more and more high 
school students are smoking cigar products while the percentage of high 
school cigarette smokers is down.
  What is the reason for this shift in tobacco consumption? It is my 
belief and I am not alone that the emerging small cigar market has 
played a significant role in this problem. Tobacco products are self-
classified by the manufacturer and labeled as small cigars. As 
cigarette taxes have gone up in recent years, the flight to cigar 
classification has become all the more tempting. As a result, there are 
an increasing number of manufacturers with products that look like 
cigarettes--the same size and shape as cigarettes--and smoke like 
cigarettes--many of them are filtered--being marketed and sold as 
cheaper alternatives to cigarettes simply because they are encased in 
brown wrapping. Members of the tobacco industry even acknowledge that 
small cigars are ``a smoking alternative to cigarettes.''
  Under current law, small cigars are taxed at significantly lower 
rates than cigarettes. This tax differential allows small cigars to 
price themselves at about half of the usual cigarette shelf price. This 
mischaracterization is costing the Federal Treasury in revenues and, 
more importantly, having the effect of enabling our children greater 
access to tobacco products. In addition, these small cigar products are 
often sold in packs of five or eight, or sometimes even individually, 
making them even cheaper and more accessible to our children.
  Research shows that increased tobacco product pricing reduces smoking 
among children. It is imperative that we implement policy to correct 
the pricing disparity among similar tobacco products. We must ensure 
that our laws intended to protect public health are not being 
circumvented. The legislation I am introducing today would increase the 
Federal excise tax on small cigars to the same rates as cigarettes. 
This will level the playing field to ensure that all tobacco products 
that look like cigarettes and smoke like cigarettes are taxed like 
cigarettes. I ask my colleagues to join me in working to ensure this 
loophole is closed.
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