Analysis: Oklahoma’s vast plains are home to a proud farming tradition that goes back to before the state officially joined the union, and that includes the production of tobacco. Tobacco growers and manufacturers like Xcaliber that are based in the state provide critical jobs and help strengthen our economy.
That’s why Congress needs to immediately end the double duty drawback tax loophole that’s benefiting our overseas competitors in the tobacco industry.
The double duty drawback impacts how foreign tobacco companies pay excise taxes. Normally those taxes are paid on imported goods, but the loophole has unintentionally enabled those companies to claim refunds without ever having paid the taxes in the first place. This costs taxpayers and the government about $2.2 billion per year, and in the next decade it’s estimated to cost billions more in the next decade.
It’s no surprise closing this loophole was a focus of President Trump during his first term before courts determined it would take an act of Congress to do so. Keeping it open is an insult to every Oklahoman – and American – who works hard to pay their taxes and wants to put America first.
U.S. tobacco production has decreased significantly for the last three decades. From approximately 180,000 farms devoted to tobacco growing in the 1980s, the number of farms has decreased to about 10,000 in 2012. Despite the significant decrease, the U.S. is still the fourth largest producer of tobacco leaves in the world, churning out 345,837 metric tons each year.
President Trump’s Big Beautiful Bill now waits in the Senate and includes language that would finally close the double duty drawback loophole. Sens. James Lankford and Markwayne Mullin should ensure the language remains in the final bill and then vote to get it to President Trump’s desk. Oklahoma’s taxpayers have subsidized foreign companies long enough and we need our representatives in Washington to do something about it.
About the association: The Oklahoma Rural Association is dedicated to the development and advancement of policies that promote and protect the rural quality of life through enhancing rural Oklahoma communities in the areas of economic growth and development, energy, education, health and other issues impacting business and residents in communities across Oklahoma.