Tobacco Firms Save $1 Billion With Kitty Litter in Cigars
Source: Bloomberg
A dozen tobacco companies have gained from a legal loophole that helped them avoid as much as $1.1 billion in U.S. taxes.
Their secret: Using fillers such as the clay found in cat litter or stuffing the products with more tobacco to tip the scales in their favor. The heavier weight let the companies sidestep a 2,653 percent increase in a federal excise tax, taking advantage of a 2009 law that spared so-called big cigars.
... “It shows what length the tobacco companies will go to avoid taxes and regulation that were designed to improve public health without regard to their customers,” Danny McGoldrick, vice president of research at the Campaign for Tobacco Free Kids in Washington, said in a telephone interview. “They should equalize the tax to stop the shenanigans.”
... U.S. Senator Dick Durbin, an Illinois Democrat, introduced legislation Jan. 31 to close the loophole. The bill would equalize the tax structure so there wouldn’t be an incentive to manipulate products, generating $3.6 billion in new tax revenue over 10 years, Christina Mulka, a spokeswoman, said by e-mail.
Read more: http://www.bloomberg.com/news/2013-03-01/tobacco-firms-save-1-billion-with-kitty-litter-in-cigars.html
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