Jun 2, 2010 9:12 AM by Bea Karnes, News First 5

Tobacco loophole in child health law costs $250M

Public health officials say a tobacco tax loophole in President Barack Obama's children's health insurance program is costing the U.S. Treasury more than $250 million a year.

The loophole allows companies to avoid huge tax increases on rolling tobacco by labeling it as pipe tobacco. The marketing twist lets companies pay less than $3 a pound in taxes, rather than nearly $25 a pound.

Daniel Morris, who tracks tobacco production at the Oregon Department of Health, first identified the loophole last year. Last week, he calculated the one-year effect of the loophole at $250 million.

The Obama administration has been working for a year to clarify the difference between pipe and rolling tobacco. A bill that would close the tax gap has stalled in Congress.


»Topics in this article

More News

Weather - Forecast
Story Photo

12 hours ago

Cooler Thursday

Windy early with blowing dust in some areas. Wind ending overnight tonight. An isolated thunderstorm possible early. Overnight low temperatures will drop...

Most Popular

Top Videos

1 2 3 4