Bush Vetoes Bill That Would Have Raised Cigar Taxes

Today, President Bush vetoed a bill seeking to add $35 billion to the State Children's Health Insurance Program (SCHIP). The funds would have come from increased tobacco taxes, including a tremendous increase in the federal excise tax on large cigars.

"If Bush hadn't vetoed it, we would have been screwed," said Rocky Patel, owner of Rocky Patel Premium cigars, who has lobbied fervently over the past few months to keep the bill from passing.

The veto does not mean the cigar industry is out of the woods. Patel said the bill will come back to Congress for further work. Patel and others in the premium cigar industry are lobbying for a flat tax of 12.5 cents per large cigar; the vetoed plan called for a tax of 52.988 percent of the manufacturer's selling price, with a cap of $3. The current federal excise tax on large cigars is capped at 5 cents.

The original plan sought a floor tax on tobacco inventories, with a tax cap of $10 per cigar.