New SCHIP Proposal: Same Old Problems
Democrats’ new SCHIP expansion bill fails to address flaws with vetoed version
Washington, D.C. – Earlier this month, President Bush vetoed a bill that would expand the State Children’s Health Insurance Program (SCHIP) by raising federal excise taxes on tobacco products. Today the president announced his intention to veto the revised “compromise” bill currently under debate in the House of Representatives. Beyond the fact that the new version would still extend government coverage to wealthier children and to adults by raising taxes, the Democrats further alienated Republicans by refusing to postpone the vote.
Today Americans for Tax Reform’s president Grover Norquist sent a letter to Congress calling for a reauthorization proposal that fits three criteria: no tax increases, including on tobacco, no increase of the eligibility threshold to over 200 percent of the poverty line, and no coverage for adults.
“The purpose of SCHIP is to cover children in low income families,” said taxpayer advocate Grover Norquist, president of Americans for Tax Reform. “Broadening the scope to include wealthier children and adults not only violates the intention of the program, but opens the door for universal government insurance system.”
The movement to raise the federal tobacco tax relies on the argument that the rate has not been increased in several years. However, on the state level, taxpayers have been faced with a consistent and substantial tax increases on tobacco products since 2000. According to analysis by the American Shareholders Association, over the past seven years, the average state cigarette tax rate has more than doubled from 42 cents to 92 cents per pack. Raising taxes on tobacco has specific negative ramifications on the economy and fiscal outlook for the state and federal treasuries.
“Increasing tobacco taxes would hurt job growth by penalizing small businesses, encourage smuggling and black market activity, and raise the pressure for states to increase taxes as they see their already-declining tobacco tax revenues go up in smoke,” continued Norquist. “I strongly urge Congress to look to free-market healthcare alternatives, rather than bloating SCHIP and further crowding out private insurance.”