AWMA’s Scott Ramminger, Anne Holloway and AWMA counsel Gene Lange recently met with senior analysts from the U.S. Government Accounting Office (GAO) to discuss a report the GAO is presently working on that was mandated under the Tobacco Control Act to study the health effects resulting from the differing tax rates on tobacco products.

Specifically, the GAO is looking at tax issues related to tobacco and the impact of the differences in tax rates between pipe and RYO tobacco, and between small and large cigars.  The GAO analysts were particularly interested in learning about how the 2009 increase in the federal excise tax impacted the distribution industry.  Ramminger provided a detailed description of the distributor role in the tobacco supply chain and the point was repeatedly made that any increase in tobacco taxes results in a corresponding increase in illegal activity with respect to these products.

The GAO officials also wanted to learn the association position on legislation pending in the Senate – S. 1403 and S. 174 – that would increase the federal excise taxes on tobacco.  We reaffirmed our association position in opposition to these measures pointing to the fact that skyrocketing taxes – on the federal, state and local level – is simply fueling the illicit trade of tobacco which allows these products to end up in the hands of minors.

The GAO report is due out in February 2012 and represents the second of the GAO reports mandated under the Tobacco Control Act.  The first report – issued this past March 2011 – was a study of cross-border and illicit trade in tobacco products and a link to that report may be found here:
www.gao.gov/new.items/d11313.pdf