According to a GAO report obtained by NBC News, a 2009 law that raised federal taxes on tobacco products to discourage smoking triggered a market shift to pipe tobacco and large cigars, costing the U.S. Treasury billions in lost revenue. In some instances, it took little more than a label change to quality for the lower tax rate, it said. The Government Accountability Office study, which will be the focus of a congressional hearing on Tuesday, found that Children’s Health Insurance Program Reauthorization Act drove manufacturers and price-conscious consumers to gravitate to pipe tobacco and so-called “large cigars” because it taxed them at lower rates than cigarettes, small cigars and roll-your-own tobacco.
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