Tobacco Companies Blow Smoke in Washington's Face -- Again!

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Last spring, President Obama [6] signed a bill into law that raised the tax on roll-your-own cigarette tobacco from $1.10 per pound to a whopping $24.78 per pound. The revenue from the tax was to be put towards expanding children’s health insurance programs. But tobacco companies [7] have found a way to sidestep the new tax: they have started re-labeling the same product as pipe tobacco, which is taxed at only $2.83 a pound. As a result, the market for roll-your-own tobacco has exploded, quintupling in just five months. Exploiting the tax loophole this way also lets tobacco companies thumb their nose at the new U.S. Food and Drug Administration [8]'s tobacco regulations by continuing to sell sweet and fruity-flavored tobaccos, which are banned under the new rules because they are attractive to youngsters. Tobacco companies are saying they've merely found a way to save themselves from a prohibitively high tax that would force them out of business.