Does this Country Need a $10 Cigar Tax?

I was aware that the vast majority of the revenue to fund the Senate Finance Committee's proposal to spend an additional $35 billion over five years on the State Children's Health Insurance Program -- PeachCare's parent program -- was to come from a higher tax on cigarettes, amounting to $1 a pack, up from the current 39 cents.

I didn't know until I read this weekend in the Wall Street Journal that the Senate proposal also would increase the federal tax on cigars, now less than five cents each, to 53% of a manufacturer's price to the distributor. That is a large jump, considering cigars can easily cost several dollars -- if not considerably more -- although the proposal would cap the tax at no more than $10 a cigar.

The proposal aims, in general, to increase taxes on various tobacco products by proportionate amounts. An exception to that is "little cigars" -- products that weigh less than large cigars, and are wrapped in a mix of paper and tobacco, not just tobacco leaves. These would see a big increase and be taxed at the regular cigarette rate, which is $50 a thousand.

Antitobacco groups and 40 state attorneys general have charged the little cigars are being used by manufacturers to attract smokers, while avoiding taxes and regulations that hit regular cigarettes.