Letter opposing the Chairman's Mark to the Children's Health Insurance Reauthorization Act of 2007 (also known as SCHIP)

Monday, July 16, 2007 - 8:00pm

July 17, 2007

The Honorable Max Baucus

Chairman

Committee on Finance

United States Senate

Washington, DC 20510

The Honorable Charles E. Grassley
Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Chairman Baucus and Ranking Member Grassley:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, respectfully opposes the Chairman's Mark to the "Children's Health Insurance Reauthorization Act of 2007" (also known as SCHIP). While the Chamber recognizes the bill's attempt to refocus SCHIP funds to be used for uninsured, low-income children, the Chamber opposes raising the federal excise tax on tobacco by $0.61 to fund this important public program.

To prejudice a narrow sector of the U.S. economy with the aim of funding a broad-based entitlement program is grossly unfair and burdensome to American businesses and consumers, as well as for those regions of the United States whose economic well-being relies upon tobaccobased agricultural and industrial activities.

Moreover, an increase in the excise tax would significantly reduce the tobacco-related revenues that states receive under the Master Settlement Agreement and increasingly rely upon to fund important programs. The Congressional Budget Office has also estimated that a federal excise tax increase would result in reduced payroll and income taxes. Additionally, a sharp increase in the tobacco tax could provide further incentive for illegal activities such as cigarette smuggling and counterfeiting.

As drafted, the Chamber opposes the Children's Health Insurance Reauthorization Act of 2007 as it hurts specific American industries, consumers and regions. Left unchanged, this bill could result in a number of very problematic unintended consequences.

Sincerely,

R. Bruce Josten
Cc: Members of the Committee on Finance