Tobacco makers were able to avoid paying billions of dollars in federal excise taxes by reclassifying their “roll-your-own” tobacco products as pipe tobacco, and small cigars as large cigars, according to a new government report and witnesses at a Senate hearing Tuesday.
The federal government lost an estimated $2.6 billion to $3.7 billion in tax revenue between April 2009 and February 2014 after passage of the Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009 created opportunities for tax avoidance and led to significant market shifts toward lower-taxed products by manufacturers, importers and price-sensitive consumers, according to a Government Accountability Office report.
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