Sunday, 28 March 2010 17:13

Snus, Taxes, and Politics

Written by Mick Hellwig
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Taxation without Representation

This article was originally envisioned to be a rant on snus, and tobacco in general users being a politically divided group and how it works against us. That was until  the politicians intervened and changed my mind for me.

With the passage of the PACT act, we tobacco users are being hurt by higher prices, possibly reduced selection and more hoops to go through to receive our favored nicotine delivery devices.

The main problem with this is people who don’t use tobacco don’t care. They don’t realize this is the opening salvo of adding taxes and increased shipping costs on their online shopping habits.

"Oh this only affects smokers and black market cigarette smugglers." Wrong! It affects me! I use snus. I buy it online since it’s really not available to me any other way. I have never purchased cigarettes, RYO tobacco, pipe tobacco or even cigars on line. Honestly, if I had access to huge snus fridges like they do in Sweden I’d probably not buy snus online except maybe, to get a bit more variety.

On the other hand if I had a huge snus fridge at my corner market I’d probably not even know snus was available online. Nor would I be as involved with this site. (How many people, over the age of 18 participate in an online dip or cigarette forums?)

Internet Taxation of EVERYTHING

PACT sucks. The biggest downside is that it will affect much more than just tobacco. If this stands it will open the door to taxing all online purchases. Yes, we are all supposed to pay state sales taxes on any online purchases. As of now only 5 states, Kansas, Kentucky, North Dakota, New York and Washington, force Amazon to collect sales tax.

I doubt many people pay sales tax when buying on Ebay, or Craigslist, or any of the 1,000’s of other web stores. If PACT passes all the court challenges, the money hungry states will feel free to tax all internet purchases.

Over-TaxationThen maybe the Federal Government will decide an English style Value Added Tax (VAT) is a good idea. It’s already being discussed. Canada already has it, along with a Goods and Services tax, plus Income taxes and all the other assorted taxes. In Canada you have to pay an extra tax if the bartender pops the top on your beer.

We all know of someone whose income/job will be directly affected by the PACT law. Granted the snus and snuff communities in the U.S. are pretty small. There are some very large Internet companies that would be crushed by having the same rules applied to them as PACT does to tobacco sellers.

How many more people will lose their jobs or livelihoods if Ebay, Amazon, Barnes & Noble etc. dissolve their Internet business?  Our politicians; Federal and State all believe that taxing things is a great way to make assured money. Look at cigarette and tobacco taxes.

When The Federal government was considering raising the RYO tax by 156% and cigarette taxes by 62 cents per pack, it was expected to haul in $71.4 Billion over 5 years. I would bet it doesn’t come close. A lot of people quit smoking. RYO tobacco companies discovered that pipe tobacco is taxed at a much lower rate so they cleverly starting making fine cut, dry unflavored or mentholated “pipe” tobacco. Both of these actions cut into the “expected” tax income.

So what will our politicians do? They’ll try to modify the SCHIP tax to cover pipe tobacco, or pass PACT in the hopes of making up part of the difference. Both are likely or have already happened. What’s after that?

Taxing the internet. Just think of all the billions of dollars in untaxed sales on the Internet. It’s a politician’s best fantasy. They won’t even really have to do anything, except pass a law that requires internet sellers to send them money, keep up the paperwork, charge higher prices and listen to the complaints of customers. Even better if the pols keep it quiet like they did with PACT.

After PACT was passed there was none of the usual self congratulations that one sees with most new bills, especially the ones that are “for the children”. Heck, the Senate didn’t even have the courage to do a roll call vote. It passed by “Unanimous Consent”.

Still the mainstream media is unnaturally quiet about PACT.  If we weren’t affected we would not even know it passed. A lot of people who aren’t paying attention will learn about it soon. Enacting an Internet sales tax could be done the same way. One morning we wake up to find that our Amazon orders now cost 25% more, with outrageous UPS shipping charges.

It will be too late then. Hopefully all those people who don’t care about PACT will wake up and see what’s coming before they are left with no one to defend them.

I’m short on hope and optimism that it will happen.

From the front lines of the Tobacco War,Internet Tobacco Taxation - The New War on Tobacco



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