Given the large number of diplomatic personnel that the U.S. hosts in hundreds of foreign embassies, consulates and UN missions, and the fact that most foreigners smoke like fiends (as experienced travellers can attest), I expect this will cause a significant loss of tax revenue.
The only upside of this decision is to "facilitate relations between the United States and foreign governments [and] to improve or maintain the availability of tax exemption privileges for the United States." In other words, we'll make some foreign diplomats happier, and keep open some reciprocal tax loopholes for our own diplomats abroad. Hum. I suspect most U.S. citizens would rather have the cash than the gratitude.
Here's the notice in the Federal Register:
DEPARTMENT OF STATE [Public Notice 6495]
Designation of Benefits Under the Foreign Missions Act; Diplomatic and Consular Exemption From Tobacco Excise Taxes
After due consideration of the benefits, privileges and immunities provided to missions of the United States under the Vienna Diplomatic and Consular Conventions and other governing treaties, and in order to facilitate relations between the United States and foreign governments, to improve or maintain the availability of tax exemption privileges for the United States, and by virtue of the authority vested in me under the Foreign Missions Act, 22 U.S.C. 4301 et seq., and Delegation of Authority No. 214, Sec. 14, dated September 20, 1994, I hereby designate as a benefit under the Act, to be granted to foreign diplomatic and consular missions and personnel in the United States on the basis of reciprocity and as otherwise determined by the Department, to include personnel of international organizations and missions to such organizations who are otherwise entitled to exemption from direct taxes, exemption from Federal and State or local excise taxes imposed with respect to tobacco products (as defined in 26 U.S.C. 5702) manufactured, packaged or sold in the United States. Procedures governing implementation of this benefit will be established by the Department of the Treasury.
DATES: Effective Date: January 28, 2009.
Dated: January 14, 2009. Eric J. Boswell, Ambassador, Director of the Office of Foreign Missions and Assistant Secretary for Diplomatic Security, Department of State.
[FR Doc. E9-1723 Filed 1-27-09; 8:45 am]