Extracted text

OCR Page 1 of 6
Tobacco - Taxes Cynthia A. Rice 10/28/99 11:23:27 AM Record Type: Record To: Bruce N. Reed/OPD/EOP@EOP, Eric P. Liu/OPD/EOP@EOP CC: J. Eric Gould/OPD/EOP@EOP, Eugenia Chough/OPD/EOP@EOP Subject: The Proposed Tobacco Assessment -- Why It is Not a Tax fyi Forwarded by Cynthia A. Rice/OPD/EOP on 10/28/99 11:23 AM Frank J. Seidl III 10/28/99 11:16:41 AM Record Type: Record To: See the distribution list at the bottom of this message CC: See the distribution list at the bottom of this message Subject: The Proposed Tobacco Assessment -- Why It is Not a Tax The language below has been prepared to help explain why the proposed tobacco assessment is not a tax. It has been revised to reflect comments made by Joe Minarik and Patrick Locke late yesterday. Q. Why is this not a tax? A. Unlike excise or income taxes, the tobacco assessment would not be based on the volume of cigarette sales (as with excise taxes), nor would it be based on manufacturers' income (as with the corporation income tax). Furthermore, unlike these taxes, the assessment would not be part of the Internal Revenue Code, but would be a provision of free-standing legislation. Finally, it would be administered by the Department of the Health and Human Services, not the Department of the Treasury, as is the case with taxes.