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The U.S. Senate Finance Committee approved a bill July 19 that would expand the program by $35 billion and raise tobacco taxes, with the largest tax increase imposed on cigars. The Senate is expected to pass that legislation this week, but President Bush has vowed to veto both plans, saying he feared harming private insurers.

While the House version increases tobacco tax by 45 cents per pack and cuts some Medicare funding, under the Senate’s version large cigars would be taxed 53 percent of the manufacturer’s price, up from 21 percent, and capped at $10, up from the current tax cap of about 5 cents. Cigars costing $18.87 or more would have a $10 tax. (The proposed cigarette tax is $1 per pack, up from 39 cents.)

‘‘It’s ludicrous. Why don’t we just tax people who eat fish?” said Joseph Cohen, owner of Classic Cigars and British Goodies in Frederick. ‘‘It’s about time the government starts doing something real for the economy to afford medical insurance as needed instead of attacking little groups who have no defense.”

The roughly $5 billion program, a partnership between state and federal government that started in 1997 with funding from tobacco taxes, is set to expire Sept. 30. Maryland’s version of the program was launched in July 1998 and enrolls more than 100,000 children annually, said Maryland Children’s Health Program statistician Patricia Holcomb.

Maryland is among the states with the highest income eligibility requirements by insuring children in families with income up to 300 percent of the federal poverty level. In Frederick County, 2,818 children were enrolled last year.

Opponents of plans to expand the program further want to both minimize the government’s role in health care and prevent a tax increase on smokers while advocates such as Rep. Steny H. Hoyer (D-Dist. 5) of Mechanicsville said private insurers would be minimally affected.

‘‘It does not constitute a government takeover of healthcare,” Hoyer said Wednesday evening at the House meeting. ‘‘It is fiscally responsible to invest in the healthcare of children because they will be more productive citizens.”

Like the majority of his Republican counterparts, Rep. Roscoe G. Bartlett (R-Dist. 6) of Bukeystown voted against the House bill opposing cuts to Medicare options.

‘‘I supported an alternative bill which would provide for a one-year extension,” Bartlett said in a statement Thursday. ‘‘This would have allowed for national dialogue and bipartisan negotiations.”

At Broadleaf Tobacco on Ritchie Highway in Severna Park, general manager Michael Lohsl said he feels ‘‘optimistic that Bush is going to correct the situation” with a veto to either plan.

‘‘It unfairly targets a small section of the community,” Lohsl said. ‘‘I’m all for providing health care, but it should be a more across-the-board tax on consumers. There’s a very large anti-cigarette wave out there. Tobacco is an easy target.”

With locations in Potomac, Gaithersburg, Olney, Ellicott City, Frederick and Urbana, Davidus Cigars owners David and Steven Castro are also rallying against the proposals, saying the tax could ‘‘shut down the premium cigar industry” in a mass e-mail to friends, family and media last week. The front page of the Web site www.daviduscigars.com calls for cigar lovers and supporters to contact their senators and oppose the tax increase.

In Rockville, Granville Smith, owner of Signature Cigars, which also has locations in Bethesda and Washington D.C., said he is relieved the proposal may not pass this year with a veto, but fears a new administration would approve it. He has sent notices to all his customers and contacted both Rep. Christopher Van Hollen (D-Dist. 8) of Kensington and U.S. Sen. Barbara A. Mikulski (D).

‘‘Our industry is mobilizing sending out e-mails and packets,” Smith said Monday. ‘‘Every customer thinks it’s insane. ... [Lawmakers] are basically putting an industry out of business.”

The Senate Finance Committee’s $60 billion plan calls for a funding increase of $35 billion to continue it for five years. The Senate Finance Committee chairman, Sen. Max Baucus (D-Mont.), who co-sponsored the Senate version he hoped to eventually expand government-funded health insurance to more low-income families.

‘‘Millions are depending on Congress to renew this program with real funds and real outreach to help uninsured children in need,” said Sen. Baucus in a statement July 19. ‘‘I hope the Administration recognizes the importance of this program.”

Cohen, who sells cigars for between $3 to $25 apiece, said he doubts the tax would affect his cigar sales as customers will likely continue paying for their pleasure, but thought targeting a group addicted to tobacco with a ‘‘sin tax is just wrong.”

Cohen said the cigar tax proposal will be the hot-button topic at the annual Retail Tobacco Dealers Association (RTDA) convention Saturday in Houston. He plans to garner a wealth of information at the meeting to share with local cigar retailers also alarmed by the possible tax increase.

This week Cohen displayed posters from the RTDA in his Market Street storefront to shore up opposition and awareness of the tax proposal.

‘‘The people who are trying to put this tax on are either stupid, dumb, immoral or all three,” Cohen said. ‘‘They’re expecting people who are addicts to pay for children to get over their health problems. They should make it a universal tax.”

Cigar Tax

Cigar tax eyed for health insurance funding

Current cost of Children’s Health Program: $25 billion for five years

Funding proposed by Senate Finance Committee: $60 billion for five years

Funding proposed by House: $75 billion for five years

Current tax cap on cigars: 5 cents

Proposed tax cap from Senate Finance Committee: up to $10

Proposed tax cap from House: $1

Source: Senate Finance Committee, House Ways and Means Committee