Governor Bill Richardson has plenty of company as he considers raising the state cigarette tax which has become a popular method of revenue enhancement in many other states besides New Mexico.

The state legislature passed a 75 cent per pack increase on the cigarette tax slated to begin on July 1st. Governor Richardson will likely sign the bill which is expected to generate about $33 million a year in revenue for the state’s recession-shrunken bankroll.

New Mexico joins Utah, Kansas, South Carolina, and Georgia that have tobacco tax hikes on their agendas. And during the last year, 16 other states have raised cigarette taxes.

Tony Penate is a smoker who questions the tax’s effectiveness. “The number one cause of preventable deaths in this country is obesity now– not cigarette smoking– so I think I’d like to see a tax on soda before they put another tax on cigarettes.”

Currently, the highest tax imposed on cigarettes is in the state of Rhode Island at $3.46 a pack while South Carolina sets the lowest pack tax at seven cents.

New Mexico’s tax on a pack of cigarettes is 91 cents and would raise to $1.66 a pack under the new legislation.

YES: Don’t subsidize costly habit at the expense of services we need.

By Ron Stephens

I’m a proud Republican and a fiscal conservative. I’m also the lead sponsor on a bill that would raise an estimated $350 million in new state taxes and attract another $1 billion in federal health care funds to Georgia. What’s more, I’m looking forward to running for re-election this year and will campaign on this issue.

If all this sounds confusing and contradictory, let me explain. House Bill 39 would raise the state tax on cigarettes by $1 a pack — from the current 37 cents a pack (fifth-lowest in the nation) to $1.37. For a whole host of reasons, this is an idea whose time has come.

For me, the case for the so-called “buck a pack” increase rests mainly on the need to promote the good health of our citizens (by discouraging smoking) and on tax equity.

Right now Georgia’s 37 cents a pack cigarette tax generates about $237 million a year, but we spend $537 million a year treating smoking-related illnesses in Medicaid patients alone. That means Georgia’s taxpayers are subsidizing the medical costs for the smokers among us to the tune of $300 million a year. Per household, Georgians are contributing $550 a year to cover the smoking-related medical costs for the state’s Medicaid patients. Raising the cigarette tax by a buck a pack would generate at least $350 million and put the burden where it needs to be — on the smokers themselves.

Let me be clear that my purpose is not to demonize smokers. Smoking is an addiction, and most of the smokers I know have tried to quit — many times. Without a doubt, the higher tax will give some enough incentive to do so. I certainly hope so. It would suit me fine if the extra dollar tax caused every smoker in the state to stop tomorrow.

Sadly, history tells us that won’t happen. The last time we raised the tobacco tax was in 2003, when we bumped it from 12 cents a pack to the current 37 cents. In 2004, Georgia’s tobacco tax revenues increased by 142 percent. Cigarette manufacturers and retailers opposing my bill warn that it will simply drive smokers across state lines to lower-tax markets, but there’s not much evidence that happens. In South Carolina, for instance, tobacco tax revenues actually declined after Georgia raised its tax in 2003.

Beyond tax equity and health care issues is the fact, of course, that Georgia is facing unprecedented budget challenges. The General Assembly is struggling now to plug a $1.1 billion hole in the state budget. The “buck a pack” tax increase on cigarettes would attract an estimated $1 billion in new federal health care funds, giving us much-needed flexibility in other areas of the budget.

Without new revenue, we’re facing truly draconian budget choices. Do we really want to lay off state patrol officers, fire prison guards and reduce the number of school days so that we can maintain Georgia’s reputation as one of the cheapest cigarette markets in the nation? Is that more important than, for instance, rebuilding a public health system that is already suffering from more than a 30 percent vacancy rate and is inadequate to handle responsibilities that range from checking diabetes and hypertension to responding to disease epidemics and terrorist attacks?

These are not scare tactics. These are the choices now facing the General Assembly — and the people of Georgia.

The next few weeks will tell the tale. Will Georgia opt for a cigarette tax that finally eliminates what amounts to a $300 million subsidy for the cigarette industry and gives us the wherewithal to get through the current fiscal crisis without further undermining the public services Georgians count on? Or will we choose to preserve the dubious honor of being the source of some of the least expensive cigarettes in the nation?

The choice is all of ours to make together. Your House and Senate members need to know what you think.

State Rep. Ron Stephens (R-Savannah) is a member of the House Ways & Means Committee.

NO: Unreliable revenue source declines over time, hurts retailers.

By John Heavener

With state revenue sinking during this economic downturn, some state legislators think they can dig out of the budget hole by raising “sin taxes,” promising that it will not only improve our health, but also solve our revenue problems.

If only it were that easy.

Cigarette taxes are a quick go-to for politicians looking to fund their spending habits. But when raising cigarette taxes become a knee-jerk reaction to budget shortfalls, we need to look at all the facts.

Should the Legislature unfairly single out cigarettes for higher taxes, all while promising the public not to tax their way out of the budget mess?

Unfortunately, government wants to play a bigger role in our personal lives every year, making decisions about our finances, hobbies and health habits that used to be up to individuals to decide themselves. If smoking is their target today, what will it be tomorrow?

Tax advocates understand that most legislators have already pledged not to raise taxes and loath to even consider taxing our way out of the state’s spending problem during a time of economic uncertainty for Georgians. So these tax-increase advocates would have legislators single out cigarette smokers and retailers to carry the burden of a tax increase.

They are quick to point to a poll they recently commissioned that claims a majority of voters would actually support a “sin tax” increase. What these cleverly worded poll questions cannot explain away is what legislators hear every day in their districts: They want the state to cut spending and do not support using tax increases to balance the budget.

There is also a strictly practical reason to rethink raising cigarette taxes. Lots of data suggests that it doesn’t work, that higher taxes on tobacco products consistently have been known to fail to produce the higher projected revenues.

Higher taxes on cigarettes increase their retail cost and encourage more people to give them up or to go looking for cheaper cigarettes somewhere else. Either way, the intended revenues don’t add up.

Tying something as important as funding government programs to a tax that is designed to bring in a steadily declining revenue stream doesn’t make sense. It might provide a short-term fix, but one that virtually guarantees us insolvency down the road. We often fall into these fiscal traps, only to face a renewed crisis later.

And the short-term solution is no sure thing either. For example, New Jersey raised its cigarette excise tax by 17.5 cents in 2006. As a result, its tobacco tax revenue dropped by $22 million a year. The governor’s answer? Raise taxes another 12.5 cents a pack.

In many cases, raising tobacco taxes doesn’t make people quit, it just moves them to do their shopping in another state. If we raise the tobacco excise tax, Savannah-area retailers located close by the border can expect to see their revenues plummet — and tobacco sales constitute a hefty portion of the business done by numerous merchants, especially small, neighborhood stores.

Another common reaction to increased cigarette taxes is for smokers to turn to Internet vendors. These scam artists, many operating out of foreign countries, don’t charge taxes at all, nor do they pay them — failing to provide the state with legally required cigarette taxes.

Their business model of online ordering, credit card payment and mail-order delivery also make it possible for kids to buy cigarettes anytime they want. No ID check to worry about; all they have to do is beat their parents to the mailbox.

Unfortunately, as nice as it would be for a simple cigarette tax hike to solve all our problems, it just won’t work. There is still no substitute for fiscal responsibility. Whether they like it or not, lawmakers should bite the bullet and figure out a way to live within their budget, just like the rest of us.

No one, especially Florida lawmakers, should feel sympathy for major tobacco companies because their market share of a poisonous product is shrinking in the state.

For decades, Big Tobacco lied to consumers about the devastating effects of smoking, and it was only in 1994 that Florida sued to recoup billions of dollars in health care costs under the Medicaid Third-Party Liability Act. Under the settlement, companies have to make payments of about 45 cents a pack, in addition to state and federal taxes.

But not all manufacturers operating in Florida have to pay. Major companies, led by Philip Morris USA, are crying foul – now that the market share of South Florida-based Dosal and a few other smaller companies has skyrocketed from 1 percent to 22 percent in Florida.

Though its motives obviously are financial and its target is Dosal, which has 18 percent of the Florida market, Philip Morris is right that all manufacturers who sell cigarettes in Florida should be taxed equally. No company, no matter how small or where it is located, should be allowed to avoid paying its fair share of the public costs made necessary by its hazardous product.
Dosal and its lobbyists fended off a similar attempt to extend the surcharge to the company last year. Lawmakers shouldn’t let the company – whose cigarettes already are much cheaper than name brands – off the hook this time.

Extending the surcharge to Dorsal and the other companies would mean millions of additional dollars to the cash-challenged state; Philip Morris estimates $221 million a year. Considering Florida collected nearly $60 million less than anticipated in settlement fund money last year and that lawmakers are facing a $3 billion budget deficit, the revenue is sorely needed.
Dosal claims it has been dismissed entirely from the suit, which was pushed by then-Gov. Lawton Chiles and former Attorney General Bob Butterworth, and, thus, shouldn’t be subjected to the surcharge. Philip Morris points out Dosal has never been formally cleared of all the state’s liability claims and that the company already makes similar payments to other states.

The state’s lawyers should thoroughly examine the settlement and seek to close any loophole allowing Dosal to escape liability.

In addition, lawmakers need to recognize that conditions have changed since the settlement was reached in 1997. Dosal is no longer a little company with a minute share of the market.

This is not, as Dosal wants lawmakers to believe, a battle between David and Goliath. This is about applying a surcharge to a sizeable company that manufactures a dangerous product. Forty-eight other states have come to the same sensible conclusion. Florida shouldn’t take the opposite stance.

Time is of the essence. Smokers can even purchase cigarettes online without any taxes being charged, the industry reports, depriving Florida of lawful revenue.

And with the steep increase in state and federal cigarette taxes in Florida over the last year, many North Florida residents are purchasing cigarettes in Alabama and Georgia, where taxes are lower, reducing revenue even more.

Lawmakers shouldn’t forget: Tobacco-related diseases and illnesses kill about 28,600 Floridians a year.

The state’s economic loss from smoking is estimated at $12.5 billion.

And taxpayers have had to pay billions of dollars in health care costs.

As Butterworth has written urging lawmakers to extend the surcharge to Dosal, “It is time to finish the job Florida started in 1997 and make all of Big Tobacco pay.”

SALT LAKE CITY — So, how do you get a fiscally conservative governor to sign a cigarette tax increase in an election year?

Make him an offer he can’t refuse — like more money for programs that he wants, which GOP lawmakers would otherwise cut, including public and higher education.

It’s a strategy that appears to be working, say sponsors of House and Senate bills raising the state’s tobacco tax.

Both Rep. Paul Ray, R-Clearfield, and Sen. Allen Christensen, R-North Ogden, said Monday they believe Gov. Gary Herbert will sign off on a tobacco tax hike, even though Herbert has been talking tough on no new taxes.

Christensen has gone so far as to put together a list of programs the $50 million from his tax increase would keep off the chopping block, ranging from public education to Utah Highway Patrol troopers to the yet-to-be established state dental school.

Although Christensen said Friday his “shopping list” wouldn’t be included in his bill. Instead, the programs that would be saved with the cigarette tax revenue would be determined through the usual budget process.

Many of the items on what he called his “shopping list” are also top priorities of the governor as Herbert negotiates the budget with

Ray doesn’t endorse earmarks, but he understands the effect of identifying where the money should go.

“It plays favorably with the governor,” Ray said. “I think a lot of that is aimed at the governor. He won’t veto it if we take care of the hot spots in the budget.”

Christensen said in a statement that “Gov. Herbert again and again has told us that he has never said he would veto a tobacco tax increase. … He has also said he did not intend to make this particular tax a political issue like some around us are doing.”

But Herbert, who faces conservative state GOP delegates in a May convention, has said he doesn’t want to increase any taxes, including those on cigarettes. Last week, the governor told the Deseret News he has veto pens “greased up and ready to go.”

But how do you get the tax hike past Herbert?

Neither lawmakers nor the governor want to lay off 29 UHP troopers, release 213 prison inmates in August, or make severe cuts to higher education and some human services.

Herbert says take more money out of the state’s Rainy Day Fund to pump into those and other programs. Taking another $50 million from the fund would still leave what he calls a respectable $200 million balance.

But conservatives don’t want to further increase the state’s “structural deficit” for the budget year that begins July 1 and beyond.

“That ensures a general tax hike,” said House Majority Leader Kevin Garn, R-Layton, in 2012 or 2013 if Utah’s economy doesn’t bounce back quickly.

So, to get Herbert’s signature on a tobacco tax bill, legislators could — on a priority basis — put those revenues into programs the governor really wants funded.

If he vetoes the bill, then those programs aren’t funded.

Of course, before the governor can decide what to do about a tax increase, lawmakers need to pass one. Ray says between GOP and Democratic representatives he has around 45 “yes” votes (38 are needed for House passage) on his cigarette tax bill. It would raise the tax on a pack of cigarettes from 69.5 cents to about $1.70.

Christensen has a harder sell to a GOP Senate caucus that’s split on the issue. He said he’ll make another pitch to the caucus Tuesday on his bill to boost the tax on a pack of cigarettes to $2. He can likely count on some Democrat senators’ votes — it takes 15 votes to pass in the 29-member Senate.

Senate President Michael Waddoups, R-Taylorsville, said he’ll support the tobacco tax increase. “I think it’s the proper thing to do,” he said.

Even the tobacco industry itself appears to accept there will be a tax hike. Reportedly, cigarette makers are hoping to limit the size of the increase to just 25 cents or so a pack, rather than stop it altogether.

That is, after all, what Utahns want, according to a recent Deseret News/KSL-TV poll that found 80 percent of the state’s residents want to see the tobacco tax increased.

And nearly 60 percent in the Dan Jones & Associates survey want the state’s budget balanced by a combination of budget cuts and tax hikes to close a $700 million shortfall.

ALBANY — A state tax department policy of not enforcing tax collections on Indian cigarette sales was officially rescinded Tuesday by the Paterson administration. But it will still take approval of a new set of regulations before the tax-free sales are halted.

Gov. David A. Paterson announced a proposed set of rules to break the decades-long dispute over tax-free tobacco sales, which critics say could be costing the state as much as $1 billion a year in revenues. The new plan envisions the tax being collected “upstream” at the wholesale level and not at Indian retail shops.

The proposed rules require cigarette manufacturers to sell cigarettes only to licensed stamping agents that certify they are not supplying tax-free retailers, such as the dozens of businesses on the Seneca Nation reservations, with cigarettes missing an official state tax stamp; they face perjury charges for lying.

The latest move comes as the State Senate Finance Committee is poised to issue subpoenas as early as today to a broad segment of the tobacco industry.

Sen. Carl Kruger, a Brooklyn Democrat who has railed against the lost tobacco excise taxes because of Indian and bootleg sales, is targeting nearly every aspect of the cigarette supply chain with a legal request for information that “could fill a dump truck,” said one government source.

The lawmaker wants to get details on the extent of the state’s untaxed cigarette industry; one state estimate has claimed nearly 40 percent of smokers buy untaxed or low-tax cigarettes “regularly.”

The Paterson administration today also will propose legislation to put in statute its new plan to permit a set number of tax-free cigarette sales to the state’s nine tribes for personal consumption by their members.

It would bypass a law already on the books that calls for coupons to be used by Indians to buy their own tax-free cigarettes. The legislation would lift a current injunction imposed by a state court judge in Buffalo against the state’s enforcement of the coupon-based law.

The release of the proposed rules kicks off a 45-day comment period and a review period that could see enactment in six months, according to an administration official. Government sources said any agreements struck in the coming months to resolve the issue with individual Indian tribes could supersede the new rules.

The proposal comes as Paterson also is trying to push through a $1-per-pack excise tax increase, to $3.75, the nation’s highest. The move would further increase the profitability of bootleg and Indian cigarette sales unless a new collection mechanism is adopted.

The new regulations would result in licensed stamping agents, which basically serve as middlemen between manufacturers and retailers, paying the taxes to Albany. Besides certifying they are making only legal, taxable sales, wholesalers would have to list the source of their cigarettes with the tax department.

Manufacturers would have a legal burden, as well, because they would have to collect the certifications from wholesalers — meaning they could not sell their products to any wholesaler unless that supplier has certified to the tobacco companies that they do not sell any illegal tax-free cigarettes.

The Seneca Nation did not comment on the proposal.

“It seems reasonable to me,” Russell Sciandra, director of the Center for a Tobacco Free New York, said of the proposed rules.

The plan also calls for an “adequate” number of cigarettes to be supplied tax-free to Indian tribes for personal consumption of its members. In the case of the Senecas’ 7,967 members, it would mean a total of 167,000 tax-free packs being supplied to the tribe every quarter — or 21 packs every three months for every man, woman and child enrolled as a Seneca.

In all, the state’s nine tribes—with a total of 31,000 members — would receive 648,000 packs of tax-free cigarettes per quarter. Licensed stamping agents would be in violation of state law if they supply an amount beyond the approved allotment for each tribe.
By Tom Precious
NEWS ALBANY BUREAU

SALT LAKE CITY — Gov. Gary Herbert said Wednesday he’s got a set of pens “greased up and ready to go” to veto a cigarette tax increase and other issues being considered by the 2010 Legislature.

The GOP governor told the Deseret News any tax increase would hurt the state’s economic recovery and said he’s concerned lawmakers are cutting the budget too deeply, particularly in public and higher education.

Republican legislative leaders shrugged off Herbert’s warnings.

“It’s just posturing,” said Senate Majority Leader Scott Jenkins, R-Plain City. “It’s about time, in fact. This is OK. We kind of expect it.”

House Majority Leader Kevin Garn, R-Layton, said there just isn’t enough money to do what the governor wants, especially without tax increases.

“Well, he’s put himself and us in a box if he wants more,” Garn said.

Herbert, though, vowed to “push back” in a number of areas that would be cut by the legislative Republicans’ reductions over his recommended budget for next fiscal year, which starts July 1.

Those areas include cutting 29 UHP troopers as well as trimming an additional $3.5 million from the prison budget, which would mean early release of 213 inmates.

There’s no need for Utahns to worry, Herbert said, about the Department of Corrections releasing inmates early, as called for in the budget endorsed by GOP leaders Tuesday.

“I’m confident that won’t happen,” he said. Still, he said state agencies are going to have to “tighten their belts. It’s going to pinch a little.”

But the governor was very clear that he sees no need to cut public and higher education.

GOP lawmakers would take an additional $60 million from colleges and universities, and are threatening to reduce public education funds.

Herbert said lawmakers should be looking at dipping deeper into the Rainy Day Fund and postponing some road projects to plug the holes in the budget.

They should take another $50 million from the fund, he said, which would still leave the balance at more than $200 million. Plus, he said, there’s a list of some $113 million in road projects that can wait until the state is in better financial shape.

Garn said using more one-time money out of the Rainy Day Fund is not something lawmakers are willing to do. And roads have long been a top priority of Republicans in the Legislature.

The governor insisted his plan will work. “We absolutely can get through this, protecting education, maintaining basic levels of service in government and do it all without raising taxes and having a balanced budget,” he said.

GOP lawmakers are looking more closely at raising the tax on a pack of cigarettes to raise some $24 million, but Herbert said he’d likely stop that.

“I’m very reluctant to use the ‘v-word’ at any time. But certainly that, the veto, certainly is on the table. It’s an option,” Herbert said. “I’ve got a couple of pens already out there, greased up and ready to go.”

Senate Minority Leader Pat Jones, D-Holladay, said the threat of a veto from the governor “will throw cold water” on the tobacco tax increase despite support from the public.

Herbert also said he would consider vetoing SB109, a bill that would give the governor the power to appoint the chief justice of the Utah Supreme Court.

“It has the perception that somehow we will interject politics into the selection of the chief justice,” the governor said in an interview. “I just think there’s no reason.”

Jenkins, the sponsor of that bill, already has said he won’t pursue it. Herbert chuckled when asked if he put a stop to the legislation.

“You want me to tell you all my secrets? I think they knew I was not too inclined to support that bill,” the governor said.
Jenkins, though, said Herbert never talked to him about the bill. “I was going to hold it anyway,” the Senate majority leader said. “He’s a big powerful guy, and I don’t want to get in trouble with him.”

The governor also said he’ll make a decision by Friday whether to veto yet another bill, SB11. The bill, sponsored by Sen. Margaret Dayton, R-Orem, says Utah alone will decide regulations on guns produced and used solely in the state.

Herbert said it’s not a gun bill but an interstate commerce issue that may be unconstitutional and could cost the state plenty to defend.

“I’m getting mixed messages as far as the cost, whether it could be done pro-bono, whether the attorney general could absorb it in his existing budget,” the governor said.

But he met later Wednesday with Attorney General Mark Shurtleff and was planning to talk with other attorneys before deciding what to do. Herbert said he wants “some assurances at least that there’s not going to be some kind of extraordinary fiscal cost to this bill.”

Jenkins said he believed the Senate could override a veto by the governor on SB11. “He’s a little concerned about it? That’s just too bad. We passed it,” he said. “Now he’s got to make his decision.”

Finding the two-thirds majority required for a veto override on a tobacco tax increase would be harder, Jenkins acknowledged. The GOP Senate caucus has yet to support or reject the measure.

Herbert just returned from Washington, D.C., where he was able delay and stop shipments of depleted uranium to Utah and resolve the issue of new national monuments in the state.

“If I could be as productive every time I go to Washington, I need to spend more time there,” he said with a smile. “And if our congressional delegation could be as productive as I was this past week, I think that would be a step in the right direction.”

By Lisa Riley Roche and Bob Bernick Jr.
Deseret News

New Yorkers are used to getting nickel-and-dimed to death from their state government.
In fact, it has become the state’s favored way to create more revenue.

From fishing and hunting fees to taxes on just about anything that moves, governors and Legislatures have favored the small stuff to grab greater amounts of money to pay for ever-expanding state spending over the past 20 years.

Those who smoke know the scheme. They pay among the highest taxes in the nation at $2.75 a pack, and if Gov. Paterson has his way, they’ll pay even more. He’s proposing to raise the state tax on cigarettes again another dollar. Add in the higher federal taxes enacted in the past year and cigarettes now average at least $7 a pack. That’s over $80 a week for a pack-a-day person on one of the most unhealthy things you can do to your body.

Many health advocates support higher tobacco taxes as a way to spur people to quit, figuring some people will decide to give up the habit for financial reasons if the health dangers aren’t compelling enough. But for many others hopelessly hooked on smoking, it just means more money out of their pocket.

Sadly, the state appears to want it both ways. They claim they want people to quit smoking, but don’t mind using tobacco taxes as a source of revenue.

And while Paterson is ready to jack the tax on a pack of smokes by a buck, funds for tobacco-cessation programs in the state are being cut. That’s hypocrisy.

Adding another dollar of taxes onto each pack isn’t going to expand the ranks of former smokers. If you can’t quit when the price is a jaw-dropping $7 or $8, what’s another buck? Maybe that’s what Paterson is betting on as well.

But Paterson’s targets go beyond smokers, a group that doesn’t have a whole lot of friends in Albany. He’s proposing a number of other taxes and fees as well, including a so-called sugar tax on beverage syrups and bottled drinks and powders. On face value, it’s not a bad idea, given alarming hikes in obesity among younger people that health officials blame in part on sugary drinks that pack a caloric punch. But again, is the tax to deter consumption or an easy revenue source?

Maybe it’s time for Albany to play it straight with taxpayers. Whether the state picks your pocket in the convenience store, in your fishing license or out of your paycheck, the effect is the same. If the governor and Legislature don’t have the gumption to cut spending enough to match existing revenues, then raise income taxes.

They’re hoping you won’t recognize that while they haven’t taken any more money out of your pay, they raised your taxes just the same.

WASHINGTON — By increasing cigarette taxes by $1 per pack, states could raise more than $9 billion in new annual revenue to help close severe budget shortfalls, a new report released by a coalition of public health organizations claimed. The group has published a national poll along with the report that claimed 67% of voters support a $1 tobacco tax increase.

The poll also claimed that voters prefer higher tobacco taxes to other options, such as other tax increases or budget cuts, for addressing state budget deficits.

The report detailed the revenue and health benefits to each state of increasing its cigarette tax by $1 per pack. If every state and Washington, D.C., did so, they would raise $9.1 billion in new annual revenue and save $52.8 billion in health care costs, it claimed.

The report, Tobacco Taxes: A Win-Win-Win for Cash-Strapped States, was released by the Campaign for Tobacco-Free Kids, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association and Robert Wood Johnson Foundation.

According to the coalition’s poll:

* By a 67% to 31% margin, voters favored a $1 per pack increase in the state tobacco tax, with 53% saying they “strongly” support the tobacco tax increase. This support crosses political lines, with a majority of Democrats (70%), Republicans (68%) and Independents (64%) favoring the increase.
* Voters preferred raising the state tobacco tax to other options for addressing state budget deficits. While 60% supported increasing the tobacco tax for this purpose, more than 70% opposed every other option presented, including higher state income, gasoline and sales taxes and cuts to education, health care, transportation and law enforcement programs.
* By a margin of 59% to 35%, voters preferred a candidate for state office who supports the tobacco tax over one who opposes it. This preference is expressed by majorities of Democrats, Republicans and Independents.

According to the report, states can achieve even greater financial and health benefits if they also increase tax rates on other tobacco products, such as smokeless tobacco and cigars and dedicate some of their tobacco tax revenues to fund programs to prevent children from smoking and help smokers quit.

The current average state cigarette tax is $1.34 per pack, with rates ranging from a low of seven cents in South Carolina to a high of $3.46 in Rhode Island.

The national survey of 847 registered voters was conducted from January 20-24, 2010, by International Communications Research and has a margin of error of plus or minus 3.4 percentage points.

Meanwhile, in South Carolina, Democratic gubernatorial candidate Jim Rex, the state superintendent of education, has proposed raising the state cigarette tax by $1.27 a pack to the national average of $1.34 and using the more than $200 million raised to prevent a proposed five-day teacher furlough and to pay for health care coverage and anti-smoking programs, reported S.C. Politics Today.

In Utah, State Representative. Paul Ray (R) is sponsoring three bills that, if passed, would raise the tobacco tax and ban some nicotine products in the state.

The Utah House approved an amendment to remove electronic cigarettes from one of the bills, the Associated Press said. The bill originally banned electronic cigarettes, which emit a trace of smokeless nicotine, but smokers at a committee hearing last week said a ban could stymie their efforts to cut back or quit the habit.

One of the bills targets nicotine candies, which Ray said are not currently on the market in Utah. But he said he hopes the bill will give the state a head start in blocking their sale.

Another of the bills would ban the sale of tobacco “paraphernalia” to minors—products such as bongs, but not matches or lighters. The third measure, which Ray has sponsored for the third straight year, would increase the state tobacco tax from 69.5 cents per pack to about $1.70 a pack.

In Illinois, Governor Pat Quinn said he is still in favor of an increase in the state’s cigarette tax, a plan that has been talked about since last year, reported the Illinois Radio Network. The bill, which has already passed in the Senate, would increase taxes on a pack of cigarettes by $1, bringing the state’s take in taxes to $1.98 per pack.

In Oregon, a State Senate committee heard public testimony on a bill that would give local governments authority to tax tobacco and cigarettes, said The Oregonian. The State House narrowly passed a similar bill in the last session, but the Legislature adjourned before the bill reached the Senate floor.

The proposal, Senate Bill 1042, would lift a ban against local governments taxing cigarettes and tobacco.

One figure that has come up has been a tax of 25 cents per pack of cigarettes, which would raise between $7 million and $9 million a year, said the report.

Guam – If you’re a smoker get ready to pay more for your cigarettes.

Governor Felix Camacho officially signed bill 150 or the tobacco tax law into effect this morning. In about 60 days from now cigarettes will be taxed at $15 dollars per 100 sticks. That comes out to about an additional three dollars per pack of cigarettes.

Cigars will be taxed at .40 cents per mini cigar, .44 cents per regular sized cigar, and .50 cents per large cigar. Chewing tobacco will also cost an additional dollar per can.

Vice-Speaker BJ Cruz was the author of this legislation.He says that he knew it would make people upset but it was a piece of legislation that he had to push through when he heard that there is one diagnosis of lung cancer per week on Guam.

“This is a very important piece of legislation because it greatly supports with our attempt to discourage tobacco usage in our community,” said Governor Camacho. “Lt. Governor Cruz and I pledge to continue supporting all efforts that provide for a healthier quality of life for our people.”

“I want to commend Governor Camacho and members of the Legislature for ensuring that this became law,” said Lt. Governor Cruz. “This will help us decrease tobacco usage among our people, but more importantly, it will reduce the number of tobacco-related health issues we would otherwise have to address in the future.”

According to PL 30-80, a significant amount of revenue generated from the tax increase will be deposited into the newly created Guam Cancer Trust Fund to be used by programs that support cancer screenings, treatment, and support services.

Additionally, tax revenues will go to GMH, DPHSS, and DMHSA to support disease prevention programs and address future healthcare demands associated with tobacco use.

Maryland’s recently enacted $1-per-pack cigarette tax increase has been a budgetary and public health success for which Gov. Martin O’Malley and the General Assembly should be proud. In the year after it took effect on Jan. 1, 2008, the cigarette tax increase brought $144 million in additional funds into the state coffers, which have helped to fund Maryland’s recent health care expansion. This expansion brought health care coverage to more than 52,000 Marylanders and brought Maryland from 44th to 16th in the nation in health care coverage for adults.

In addition, during the year after the cigarette tax took effect, there were 74 million fewer packs of cigarettes sold in Maryland, and partly as a result, Maryland now has the fourth-lowest smoking rate in the nation. Some have argued that more people just bought their cigarettes in neighboring states with lower cigarette taxes. Not so.

During 2008, total cigarette sales dropped by 103 million in Maryland, Delaware and the District of Columbia, all of which raised their cigarette taxes that year. At the same time, in the three neighboring states that did not raise their cigarette taxes, Virginia, Pennsylvania and West Virginia, cigarette sales went up by 37 million packs. Therefore, the vast majority of the net drop in cigarette sales in Maryland, Delaware and D.C. was from people smoking less, which saved thousands of lives and hundreds of millions of dollars from tobacco-caused illness and death.

Of course, there is some tobacco smuggling in Maryland, although we have no idea how much. What we do know is how much additional money the state has raised and how much the tax increase has reduced smoking. We are pleased that Comptroller Peter Franchot is doing all he can to stop this illegal activity. He could use more effective tools to reduce cigarette smuggling.

Fortunately, there are relatively simple, cost-effective measures Maryland could implement to prevent and reduce cigarette smuggling and other tobacco tax evasion. California, for example, instituted a new high-tech tax stamp for cigarettes and enjoyed a $100 million increase in its cigarette tax revenues (without any tax increase). But Maryland is still using hard-to-see and easy-to-counterfeit tax stamps based on technology from the 1950s. A high-tech tax stamp would shut the door on the tax-free sale of contraband cigarettes by Baltimore retailers by enabling enforcement officials and others to quickly and definitively identify any contraband cigarettes that are in transit or on retailer shelves.

Maryland could also increase statutory penalties for trafficking in contraband tobacco products; require better record keeping by wholesalers and retailers; set up hot lines for consumers, retailers and others to report illegal cigarette sales; better protect whistle-blowers from retaliation; and allow enforcement agencies to keep some of the penalties and fines they collect from contraband traffickers to support expanded enforcement efforts.

With a high-tech tax stamp and enhanced enforcement, Maryland would become a state that criminal smuggling organizations would avoid entirely. It would simply be easier and more lucrative for smuggling syndicates to sell their contraband cigarettes in states like New Jersey or New York that have even higher tax rates than Maryland and still use old-fashioned tax stamps that are easy to copy.

Plainly, Maryland’s past tobacco tax increases have worked well to save lives and raise money to expand health care. It would be a shame if exaggerated fears about smuggling, such as those raised in a recent column by The Sun’s Jay Hancock, stopped the state from again raising its cigarette tax. Such an increase would bring in desperately needed new revenue that could further expand health care coverage. It would also improve worker health and productivity, save lives, reduce government and business costs, and protect more of our kids from a lifetime of tobacco addiction.
By Vincent DeMarco
February 3, 2010

A bill that would raise cigarette excise taxes in the state by $1 a pack to raise money for education was snuffed last week when a legislative committee voted unanimously against the idea, the Santa Fe New Mexican reported. However, two other bills remain that could raise the state’s cigarette tax.

The House Business and Industry Committee voted to table House Bill 35, sponsored by Democratic Rep. Brian Egolf, which killed it for this session. Egolf said the legislation would have raised $36 million, earmarked for the public schools.

Health advocates, including the American Cancer Society, supported the bill, along with several labor and religious organizations. Supporters saw the bill as a way to prevent further cuts to education and other state programs as the state faces a $600 million budget shortfall, the report stated.

Opposing the bill were tobacco lobbyists and representatives of several business groups, among them Mark Smith, of the Santa Fe Natural Tobacco Co.,

“We pay a good wage,” he told the newspaper. “We’ve been in Santa Fe 27 years.” Smith claimed the cigarette tax increase would cause the loss of hundreds of jobs statewide in the retail industry.

Other opponents noted that the federal tax on cigarettes went up by 62 cents a pack only last year.

However, there are still two Senate bills that would raise cigarette taxes, but if one or both passed the Senate, they likely would have to go through the same committee that voted down this bill, the report stated.

Germany lost out on at least four billion euros worth of cigarette revenue in 2008 as smokers looked for ways to avoid hefty taxes, a study from the Hamburg World Economy Institute (HWWI) has found.

The number of cigarettes smoked in Germany without being taxed in the country has gone up from 16 percent three years ago to 20 percent, it said.

Smokers consumed a total of 23 billion such cigarettes, according to the figures, and the majority were purchased legitimately in other countries. But about seven billion cigarettes were obtained illegally, fueling fears that the trade may be boosting organized crime.

Signs of smuggling

The institute said price differences caused by high taxation allowed organized crime to thrive from trading in contraband. Signs of sophisticated smuggling operations similar to those in the United States, where different states have different tax rates, were now “recognizable” in Europe, according to the institute.

Cigarettes on the shelves in a shopBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: The price of cigarettes has gone up in recent years

The trend comes as smokers try to dodge higher cigarette taxes introduced as a public health measure. Since the latest tax increase in February last year, a packet of cigarettes has cost about 4.50 euros – of which around 3.75 euros is tax.

“The new EU member countries have much lower taxes on cigarettes than we have in Germany and there is always the possibility to smoke smuggled cigarettes. These are, of course, much cheaper,” said HWWI Director Michael Braeuninger.

The majority of illegal cigarettes come from Ukraine (3.2 billion) and Russia (2.4 billion), according to the market research organization Ipsos.

Regional differences

The study showed large variations by region of the average proportion of untaxed cigarettes smoked. In some western parts of Germany it was as low as 10 percent while in some eastern areas half of the cigarettes bought had no German duty paid on them. Most of those cigarettes originated in Poland.

The study was carried out on behalf of Germany’s cigarette industry association, the DZV, which is calling for increased activity against smuggling and counterfeit products.

The change in smoking habits is estimated to have cost the cigarette industry about 1.2 billion euros in 2008.

New York City can’t use a federal racketeering law to accuse discount cigarette retailers of evading hundreds of millions of dollars in taxes on Internet sales, the U.S. Supreme Court ruled.

The nation’s highest court, voting 5-3, today threw out the city’s claims under the U.S. Racketeer Influenced and Corrupt Organizations Act in lawsuits filed in 2003 and 2004.

More than 400 Web sites sell cigarettes over the Internet with many falsely advertising their sales as “tax free,” according to one of the complaints. The city accuses the retailers of not complying with a federal law requiring them to turn over information about their customers to state officials for tax-collection purposes.

Writing the court’s lead opinion, Chief Justice John Roberts said there wasn’t a close enough connection between the alleged failure to supply that information and the city’s inability to collect the taxes. The city contended it could have used the state information to pursue unpaid taxes.

“We have never before stretched the causal chain of a RICO violation so far and we decline to do so today,” Roberts wrote.

The decision reversed a 2008 ruling by a federal appeals court. Two of the defendants, Hemi Group LLC and Kai Gachupin, appealed to the Supreme Court.

Other City Claims

The appeals court decision left open the possibility that the city might be able to press claims against the retailers under New York state law. The Supreme Court didn’t review that part of the ruling.

The city is also invoking a different federal law, known as the Contraband Cigarette Trafficking Act, against other cigarette retailers and wholesalers. That law was amended in 2006 to authorize lawsuits by local governments.

“The city currently has available to it stronger, new legal ammunition that we have used successfully – and will continue to use in the future – in our fight against cigarette bootlegging and tax evasion,” said Leonard Koerner, the chief of the appeals division in the New York City Law Department.

At $4.25, the tax on cigarettes sold in New York City is the highest in the nation. The state collects $2.75 and the city $1.50.

Justices Antonin Scalia, Clarence Thomas and Samuel Alito joined Roberts’s opinion. Justice Ruth Bader Ginsburg agreed with the result, though she accepted only some of the chief justice’s reasoning.

Justices Stephen Breyer, Anthony Kennedy and John Paul Stevens dissented. Justice Sonia Sotomayor didn’t take part in the case.

New York City Mayor Michael Bloomberg is the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.

The case is Hemi Group v. City of New York, 08-969.

By Greg Stohr
January 25, 2010

A body of Non Governmental Organization under the aegis of Africa Tobacco Control Regional Initiative (ATCRI) is making a strong demand on the government of Africa to seek ways of controlling tobacco use in the continent. This cautionary warning is a result of increase in deaths resulting from smoking complications.

No fewer than 5.5 million deaths, resulting from complications from smoking occur in 2009 alone, a World Health Organizations´ statistics reveals. A large chunk of the death was recorded in Africa. This has prompted action from civil society groups concerned with Tobacco Control issues in Africa to try and reverse the trend.

Ethiopian Oncologist, Dr. Bogale Solomon offered a simple but practically hard option. “If everybody agrees to stop smoking at once,” he said, “we can reverse the effect in a day.” However, he was equally cognizant of the fact that such a quick solution was easier said than done.

Bogale stated that tobacco has about 50 chemicals that are known carcinogens. “In more than 90 percent of the time,” he said, “lung cancer is induced by tobacco.” He also recalled that several forms of cancer are induced by tobacco. The oncologist underlined the fact that even if the more people are exposed to tobacco chemicals, the more likely that they will be affected by cancer; there is no as such a safe level of exposure to tobacco.

This growing challenge will put pressure on already overstretched public health burden on Africa, which makes it sensible to implore information provision as a persuasive tactics for smokers to quit and for government to take serious actions “Smoking tobacco is not a matter of personal choice, as it affects not only first hand smokers but also others around them.” Says Bogale.

ATCRI´s acting director Mr. Bode Oluwafemi believes that one way to control the use of tobacco and cut smoking related death is a systematic behavioral change approach. “We need to adopt a strategy for dealing with the Tobacco companies. We need to task African government to place a strong regulatory demand on Tobacco importation or production in their various countries….The Tobacco companies must be made to abide by the provision of the Framework Convention on Tobacco Control, which provides for pictorial warning on the packs of cigarette, such warning signals are deliberately omitted in Africa and it is unacceptable” he said.

This strategy seems to be working out with a few success cases. For instance, two States in Nigeria has placed a ban on public smoking. Few weeks ago America´s State of North Carolina joined the league of states´ that have made smoking illegal in public arenas. This is one step forward; another step is to ensure that these legislations are well implemented.

Another strategy proffered by ATCRI is a provision of reliable information on the situation of Tobacco Control in Africa “If we know what the true situation is in each country, it will give us a guide to new approach and strategies” says Mr. Adeola Akinremi, Africa Regional Coordinator for Framework Convention Alliance, an organization that is ensuring that the contents of the Framework Convention on Tobacco Control is implemented.

At the moment ATCRI with the support of International Development Research Centre, IDRC is gathering useful information that will help develop country-specific intervention for the control of tobacco use African.

Gov. David Paterson is again positioning New York state to begin collecting taxes on cigarettes sold on Indian reservations, revisiting a budget issue perennially overshadowed by emotion.

The governor said Tuesday he would order his tax department to draft regulations to enforce a 2008 law intended to stop wholesalers from selling untaxed cigarettes to tribes.

That would force Indian retailers who currently don’t charge the state’s $2.75-per-pack excise tax and 4 percent sales tax to pay more to suppliers up front and ultimately raise their prices.

Paterson said it is a matter of fairness to non-Indian stores who do charge the taxes, especially now that he has proposed raising the excise tax to $3.75 per pack in the fiscal year beginning April 1.

A pack of Marlboros was selling at a Buffalo gas station for $7.91 Wednesday, compared with $5.09 at a Western New York smoke shop.

“This is no disrespect to the Indian nations,” Paterson said in his budget address to lawmakers in Albany. Non-Indian stores, he said, “need an opportunity to survive.”

Paterson’s budget proposal does not yet anticipate any revenue from reservation sales to non-Indians because the regulations are not in place, but supporters of the tax collection plan, including the New York Association of Convenience Stores, estimate the state would raise hundreds of millions of dollars a year.

NYACS President James Calvin said research shows that about half of all cigarettes smoked in New York are bought tax-free.

“There’s been this enormous drain of business and customers away from our stores,” Calvin said Wednesday.

Paterson’s plan to set regulations for enforcing the 2008 law, to be followed by a six-month public comment period, would allow New York to ask a state Supreme Court judge to lift a 2009 order blocking enforcement of the law. The order was granted after an Indian retailer and northern New York distributor argued the state had not established a system to tax non-Indians while exempting Indian customers.

In the meantime, Paterson said he would continue to negotiate with the state’s tribal leaders toward a peaceful tax-collection plan.

Two previous efforts to tax reservation sales, in 1992 and 1997, resulted in members of the Seneca tribe of Western New York blockading state highways, setting fires and clashing with troopers.

Seneca President Barry Snyder Sr. has said future violence would not be condoned.

Lawmakers are scheduled to vote this week on a bill that could increase the price of cigarettes by $2 a pack.

The American Red Cross

Senators decided to vote on Bill 150 last night after discussing the bill for several hours. Sen. Benjamin Cruz, an author of the bill, said it will be voted on by Friday.

If Bill 150 becomes a law, new taxes on cigarettes and other tobacco products will take effect 60 days later. The current $1 tax on cigarettes will climb to $3 and the current $3.50 tax on a pound of snuff will climb to $14.

Cruz said he hoped a higher price on cigarettes would persuade some smokers to quit and prevent children from starting. According to the bill, Guam has the highest rate of adult tobacco use of all U.S. states and territories. “It’s embarrassing to discover that on Guam we are number one, but not in education. We are number one in smoking,” he said. Adding later: “We are number one for the wrong reason.”

If Bill 150 is passed, the money raised by the new taxes will go into the Healthy Futures Fund, a new pool for money that can be appropriated by the Legislature for health agencies, substance abuse awareness programs and public safety programs.

About a third of the money will go to Guam Memorial Hospital, the Guam Cancer Trust Fund and the Guam Cancer Registry. Speaker Judith Won Pat called the bill the single most effective policy to lower tobacco rates and to build programs that prevent smoking habits.

Most of the debate on the bill was about how high the new taxes should be.

Sen. Adolpho Palacios felt $2 tax increase per pack was not enough. Palacios said senators should shape the taxes added by the bill by considering how much smoking costs the government in health care.

Tobacco products are a leading cause of lung cancer and lung cancer is the most common cause of death on Guam, according to Pacific Daily News files.

Even if these taxes are enacted, some people will continue to smoke, Palacios said. If they chose to do so, they should pay for the costs of their future health care, he said. “Even if we double this or triple this, there will be smokers and they will still not pay for all the harms and ills they create,” Palacios said.

Not all senators supported the increase. Sens. Frank Blas Jr. and Telo Taitague worried the new taxes could push smokers to a black market. Blas worried smokers might be driven to crime to support their addiction.

Taitague said the increase was too much too soon. “At the rate we are going right now we might as well just ban cigarette smoking on Guam, period,” she said.
Snuff

Cruz initially proposed a larger increase to the taxes on other kinds of tobacco, including snuff, because he wanted it to be equal to the new tax on cigarettes. Cruz didn’t want the new taxes to force smokers to switch to snuff, which “is even more disgusting.” The current tax on snuff is $3.50 per pound, but senators have considered raising the price to as much as $21 per pound.
January 21, 2010

Should they turn their gaze northward, state legislators looking to increase tobacco taxes by as much as $1 per pack will discover a cautionary tale.

One recent report out of Canada suggests that 48 percent of cigarettes consumed in Ontario, for example, come from smuggling — a rate that has increased and decreased with excise tax rates.

Our own research indicates that, if the $1-per-pack tax increase is adopted in Washington, the state’s cigarette smuggling rate will leap to more than 50 percent of the total market, along with other very expensive unintended consequences.

As recently as 1980, cigarette tax rates in Canada were in the same range as in most U.S. states. In a book published in 2000, “Tobacco Control in Developing Countries,” several economists describe how this changed beginning in the early 1980s. By 1994, Canadian federal and provincial cigarette taxes had been increased to “more than five times the U.S. average.”

As a result, smuggling accounted for 30 percent of the market by 1993. To combat this, Canada’s federal government (and some provinces) slashed cigarette tax rates in 1994. As predicted, legal sales rose dramatically and “the overall smuggling problem all but disappeared.”

The economics lesson didn’t stick, however. By 1998, Canada’s politicians were once again increasing cigarette taxes, widening the gap between their rates and most American taxing jurisdictions. As a result, Canada began experiencing renewed and rampant cigarette smuggling.

In March 2009, the Center for Public Integrity described Canada as having “a runaway black market,” complete with brazen heists from tobacco farmers, mobster- and gang-related crime, and even violence against police.

Of course, these unintended consequences are not limited to Canada. Examples of theft, violence and organized crime involvement in the illicit cigarette trade are reported with great frequency here in the United States, too.

In December 2008 we published a study with colleague Patrick Fleenor, titled “titled “Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review,” designed to measure the smuggling rates of 47 contiguous states. We recently updated the model to include changes to the Federal Excise Tax.

Based on that model, we believe that hiking taxes $1 per pack will lead to a leap in the total smuggling rate in Washington from 39.3 percent to 51.5 percent. That is, 51.5 percent of the cigarettes smoked in the state of Washington will be contraband.

We also expect legal paid sales to drop by at least 20 percent over 12 months following the tax hike, but as a direct result of smuggling, not from people quitting smoking. Research shows that as much as 85 percent of the after tax-increase change in cigarette sales is a function of tax avoidance — as opposed to smoking avoidance.

The smuggling will occur in two major forms: casual and commercial.

Casual smuggling typically involves individual bargain hunters shopping for themselves or perhaps a friend over the state border or perhaps on the Internet.

Commercial smuggling involves large-scale organizations that ship semi-tractor trailers and vans long distances and maintain complex distribution systems.

Our estimates indicate that nearly 30 percent of the smuggling will come from these commercial haulers. It’s worth noting that some of the trailers are actually hijacked from underneath legitimate truckers themselves.

Anyone familiar with the history of alcohol prohibition knows that much of the booze consumed in the states then was brought in illegally from Canada. Today’s policymakers are engaging in a form of “prohibition by price” — making cigarettes effectively illegal by raising their costs — so we’re reliving many of the unintended consequences of that era.

Consider some parallels: violence against police, corruption of law enforcement, the sale of adulterated products manufactured by illegal producers (“bathtub smokes,” anyone?), smuggling, theft, hijacking, expansion of organized crime syndicates and even the sale of “loosies” – cigarettes illegally sold one stick at a time. (During Prohibition, men would sell single shots of whiskey to factory workers leaving manufacturing plants in the Detroit area.)

If state lawmakers wish to hike cigarette taxes, they must do so with the knowledge that the new rate is likely to generate a fraction of the new revenues they suspect and much more in the way of crime.

Today’s cigarette smuggling issues — on both sides of the U.S.-Canadian border — are the product of an addiction: Politicians addicted to the tax revenue generated by the sale of a legal product that people want.

Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Todd Nesbit is a Penn State economist and Mackinac Center adjunct scholar.

As the new year unfolds, Georgia citizens are wondering how the new leadership in the Georgia Legislature will do this session.

The timing of former House Speaker Glenn Richardson’s scandal is unfortunate, as lawmakers prepare to handle a myriad of issues. One of the most important is Georgia’s $1.3 billion budget shortfall that gets worse every day.

Now that the details of “Speakergate” have unfolded, it has become clear that abuse of power and inappropriate relationships with lobbyists were problematic. One relationship suggests that there were other under-the-table deals benefiting big tobacco companies that have gone unnoticed.

A shocking report, released by Atlanta Fox 5 TV’s Dale Russell several weeks ago, uncovered evidence suggesting that prominent tobacco lobbyist Raymon White acted as a facilitator for the alleged relationship between Richardson and the female Atlanta Gas Light lobbyist.

In an e-mail volley uncovered by Russell and his team, Richardson asks White, “Have you heard from my girl?” and, “How do I get to her?” White responds to Richardson’s requests via e-mail, saying, “Will you be free tomorrow? We can get to her, but it will have to be sneaky. At this time, it’s the best strategy.”

Georgia citizens should wonder what White was getting out of facilitating the relationship. White, a noted contract lobbyist at the Georgia Capitol, counts the Altria Group as a client. Altria is a parent company to brands like Philip Morris and U.S. Smokeless Tobacco.

One of the most discussed solutions to the revenue struggles in Georgia has been the proposed $1-per-pack increase to the state’s excise tax on cigarettes. The measure has been proposed for the past two sessions by Savannah Republican Rep. Ron Stephens, who points out that the measure could save thousands of lives and raise close to half a billion dollars in annual revenue that would go a long way towards filling the widening budget gap.

What’s more, it could save the state millions of dollars each year in Medicaid expenditures used to treat smoking related illness by discouraging smokers to continue the habit.

The bill filed last year is still alive and is stuck in the House Ways and Means Committee. Given the news about his dealings with White and considering the obvious impact that the bill would have on tobacco companies represented by White, it seems more than a coincidence that this measure was blocked by Richardson.

Considering the benefits that would be realized by the state and polling data that showed overwhelming bi-partisan support, why else would it have been done?

With new leaders poised to take over in the House, there is an opportunity to move Stephens’ bill, House Bill 39. The legislature should pass the additional cigarette tax that is supported by 75 percent of Georgia voters.

Does it really make more sense to continue to cut money for education, health care and transportation than to increase Georgia’s tobacco tax towards the national average? Kids need teachers, not cheap cigarettes.

Hopefully, the new Republican leadership will answer these tough questions by listening to the voters, not by catering to lobbyists for big tobacco. According to a popular axiom, those who fail to learn from history are doomed to repeat it. Unfortunately, such a failure by the new GOP leadership would come at a steep cost.

Bill Burns is a political consultant and Georgia advocacy director for the American Heart Association.

A new tax regime for asset transfers from parents to their children – which will be finalised after completion of a so-called “social dialogue” over proposed changes to the country’s tax system — is foreseen in an amendment tabled in Parliament by the finance ministry late Thursday evening.

The same amendment also envisages higher taxes on cigarettes and alcohol.

The late-night amendment stipulates that tax on gifts or parental asset transfers will be calculated under an existing status but on temporary basis. Final settlement will be made under a new law, following deliberations between the government and so-called “social partners”.

A finance ministry statement, issued on Friday, referred to the current PASOK government’s policy statement as well as comments by the prime minister – on Dec. 13 — advocating a reinstitution of inheritance, gift and parental asset transfer taxes. The ministry press release also opined that the measure was fair.

Under the amendment, tabled in Parliament, the government will raise the special consumption tax on cigarettes from 57.5 pct to 70 pct and on alcohol by 20 pct, a move aimed at reaching the average tax rates prevailing in the EU. The new taxes will be valid from Jan. 12 and Jan. 8, respectively.

The ministry said it estimates that the measures will raise an additional 930 million euros annually from tobacco products, and around 70 million euros from alcohol.

One of the last options Hamilton County commissioners have to fix a fast-approaching debt in the stadium fund appears to be fading fast.

A proposal for a countywide cigarette tax was met with a lukewarm reception Tuesday by several local legislators, leaving the county with dwindling options. A cigarette tax requires approval by the General Assembly, and several local state legislators Tuesday said they don’t support it.

One of them supports a sales tax increase instead, which doesn’t require legislative approval. It would need only the vote of two of the three commissioners.

Six of the 11 Hamilton County legislators met Tuesday morning at the county administration building with Hamilton County Commissioner Todd Portune for a closed-door briefing on stadium fund, which pays construction debt on Paul Brown Stadium and Great American Ball Park. The fund will go into the red later this year.

Portune and Commissioner Greg Hartmann last month proposed bridging the gap with a cigarette tax in lieu of cutting a homeowner property tax rebate. But the idea isn’t faring well.

“I told them today I cannot support (the cigarette tax),” said state Rep. Connie Pillich, D-Montgomery, after the meeting. “I really feel penalizing one small segment of the population for the needs of everyone is not really the best idea.”

State Rep. Dale Mallory, D-West End, said it’d be tough for him to support the tax “because we’ve kind of beaten the smoker down to the ground.”

After the meeting, Portune stopped short of saying the cigarette tax is extinguished, but acknowledged proposing it would be a risk.

“In order for it to work, we need not just tepid support, we need enthusiastic support,” he said.

State Rep. Tyrone Yates, D-Evanston, is so far the only legislator to say he supports the tax. Ohio levies a $1.25 per pack tax on cigarettes. The federal government also levies a cigarette tax.

It’s unclear how many cigarettes are sold annually in Hamilton County. According to estimates from the Ohio Department of Taxation, statewide sales equated to 63 packs a person in the 2009 fiscal year, which ended June 30. At that rate, about 53.6 million packs of cigarettes were sold in Hamilton County during fiscal year 2009, according to Enquirer calculations. A 50 cent-per-pack tax, for example, would bring in about $26.8 million a year.

Commissioners had not disclosed what the potential tax rate would be. Cuyahoga County (which includes Cleveland) levies an additional 34.5 cent-per-pack tax on cigarettes to pay for sports stadiums and an arts center. Sales there were slightly lower at 50 packs per person in the 2009 fiscal year. Summit County is currently pursuing a cigarette tax.

Yates told the media Tuesday that he thinks a sales tax increase is a good option for Hamilton County – and one that doesn’t require legislative approval – to plug the hole in the fund.

“That (deficit’s) not going to disappear without some help from our fellow citizens,” Yates said. “I believe that the citizens of this county would be prepared to help the county commissioners get out of this hole.”

A third option – reducing a property tax rebate to homeowners – was already nixed for this year by two of the three commissioners, Greg Hartmann and Todd Portune, though it could be revisited in future years.

Voters approved a sales tax increase in 1996 to pay for the stadiums. Some of the revenue is also reserved for Cincinnati School District, stadium operations and the property tax rebate. However, sales tax revenue has fallen short of projections. Although it will contain enough money to pay the debt service, it won’t have enough to meet its other obligations.

Legislators acknowledged Tuesday that the county is in a bind.

Pillich said a sales tax is probably more fair than a cigarette tax, but doesn’t like either option.

State Rep. Denise Driehaus, D-West Price Hill, said she doesn’t like either tax idea.

They noted there had also been some discussion at the meeting about delaying property tax rebate payments until the county can get the deficit under control.

Although legislative approval isn’t needed for a sales tax increase, it would require a huge marketing campaign to voters where legislative support would be beneficial.
Commissioners can impose up to a half-cent sales tax increase on their own, but it would be subject to referendum.

The last time the commission tried that, in 2007, tax opponents gathered enough signatures to put the tax on the fall ballot – where voters rejected it. That tax would have paid for a jail and public safety programs.

A quarter-cent sales tax hike would generate about $28 million annually, enough to provide a long-term fix for the stadium fund.

Portune said after the meeting that he wasn’t ready to comment on what option commissioners will pursue. More discussion will come at Wednesday’s regular commission meeting, he said.

Pepper told the Enquirer he would not support a sales tax increase. He thinks the county should have done what the administration proposed in November – reduced the property tax rollback. He said that would have helped to bridge the 2010 deficit, buying time to work on longer-term solutions like a riverfront surcharge on things like game tickets or food sales.

By Jessica Brown, January 5, 2010

TOKYO – Starting next October, the Japanese will pay 4 cents (3.5 yen) more per cigarette, Bloomberg reports. That’s in addition to the 1.5 yen per cigarette tobacco companies will add. Japan is the world’s fourth-largest cigarette market.

The tax increase is the first in four years and is part of Prime Minister Yukio Hatoyama’s plan to decrease smoking in an effort to lower health insurance costs. Japan also faces a tax revenue deficit. The 3.5 yen per cigarette raises a 20-pack of cigarettes 33 percent.

Japan Tobacco could increase prices by more than the tax gain to counter an anticipated fall in smoking rates, said President Hiroshi Kimura. “The government will probably keep increasing the tax and more people will stop smoking,” said Mitsuo Shimizu, a market analyst at Cosmo Securities Co.

The fifth in more than 20 years, the tax increase is the biggest, since the previous tax hikes stayed below 1 yen per cigarette. Cigarettes are fairly inexpensive in Japan, with the price of about a third of the cost in the United Kingdom.

Currently, the smoking rate for Japanese men is just over 36 percent last year, with the health ministry predicting that number to drop to around 27 percent with the tax increase.

NEW YORK – In a move that will undoubtedly present significant ramifications for Japan Tobacco Inc., Philip Morris International Inc. and British American Tobacco PLC, Japan is preparing to announce its biggest-ever tax increase on cigarettes, The Wall Street Journal reports.

In the $38 billion tobacco market where 40 percent of the male population smokes and a pack of cigarettes costs less than $3.50, the tobacco companies can expect a “shrinking market and falling demand” if prices are raised, according to the WSJ. As a result, any growth is expected to come from seizing market share from rivals.

“We have to grow our share in this country through innovation,” said Naresh Sethi, president of BAT Japan. “We need an iPod of cigarettes.”

Japan’s Prime Minister, Yukio Hatoyama, is expected to triple taxes on cigarettes from one yen to three yen per cigarette. This amounts to a “monumental” increase, as the country has seen workers’ salaries decreasing.

A government official said that an announcement could be made as early as next week and would then have to be passed by Japan’s parliament next year, a move that was described as a “formality.”

“For health reasons, the idea was to raise the tax rate by a greater level, but we had to raise it more gradually,” said a finance-ministry official. “The new administration wants to raise health consciousness.”

The year has not come to an end, yet lawmakers are already planning on how to take more of your money during 2010. Legislators in both Utah and Kansas are both looking for ways to fix their overspending problems and mistakenly think the way to do so is through a heavier tax burden. The target is a familiar one: tobacco taxes.

Last year in Kansas a $0.75 per pack increase failed to pass, but the idea still resonates with some legislators as well as Democrat Governor Mark Parkinson. The state already has some of the highest cigarette taxes in the region, currently $0.67 per pack. One study by the Mackinac Center for Public Policy estimates 19% of all cigarettes consumed in Kansas are bought from cheaper neighboring states, such as next door Missouri whose rates are $0.17 a pack. Any tax increases will lower the quantity bought in Kansas even further.

The same situation exists in Utah, where a massive $2.30 per pack increase was defeated year. House Speaker Dave Clark was recently quoted stating that of tax increases “all of that is still on the table…for me personally, tobacco is first on the list.” Thankfully, Utah Governor Gary Herbert’s preliminary budget recommendations wisely leave out any tax increases whatsoever.

What tobacco hike backers fail to consider is that a higher tobacco tax falls predominately on lower income individuals. The average smoker has an income just over $36,000, roughly 30 percent less than non-smokers. Any tax hikes in either state would only compound the harm done by the 156% increase at the federal level that was imposed earlier this year. Furthermore, excise tax increases never generate expected revenue, as people simply buy less of the product once it becomes more expensive. Tax hikes are not the solution to these states’ overspending problems; more responsible fiscal policy is.

LONDON -The U.K. government’s failure to reverse last year’s tobacco and alcohol duty hike while at the same time raising sales taxes will result in a further increase in the illicit tobacco trade in the U.K., an industry trade body said Wednesday.

The Tobacco Manufacturers’ Association, which represents cigarette makers like British American Tobacco PLC (BTI) and Imperial Tobacco PLC (IMT.LN), slammed the tax moves as “a return to the bad old days.”

When the U.K. sales tax was cut in December 2008 to 15% from 17.5%, tobacco and alcohol excise duties were raised in order to compensate for the cut. U.K. Chancellor Alistair Darling Wednesday returned sales tax to 17.5% without reversing last year’s duty rise.

The TMA said this would effectively mark the largest tax increase on tobacco products in ten years, with between 13 and 18 pence added to a pack of cigarettes.

“Not only will this increase be significantly above inflation, but it will also take place against a backdrop of rising unemployment and falling incomes, providing further incentives to criminals to illegally import and distribute cheap tobacco to adult smokers and potentially children,” said Christopher Ogden, Chief Executive of the TMA.

The TMA estimates that 24% of the U.K.’s cigarettes market and 62% of handrolling tobacco products are purchased without the payment of U.K. duty.
DECEMBER 9, 2009

CHARLESTON, W.Va.–One Kanawha County lawmaker believes targeting tobacco could be the key to combating rising health care costs and paying down debt in West Virginia.

When the Legislature convenes in January, Sen. Dan Foster wants fellow lawmakers to look at increasing the state cigarette tax by an additional dollar. That tax now stands at 55 cents in West Virginia.

“I always push for increasing the cigarette tax. Nothing makes more sense in terms of revenue and affecting public health,” said Foster, who is a doctor and serves on the Senate committee for health and human resources.

The last time the state cigarette tax went up was in 2002 when it increased from 18 cents to 55 cents.

Earlier this year, legislators debated a proposal that would increase the tax another 65 cents to a total of $1.20 per pack. The measure ultimately failed. Some supporters of the legislation said they believed the bill would have been successful had Congress not decided to raise the federal tax on cigarettes at the same time. The federal cigarette tax jumped 61.6 cents in April to $1.01.

If the state decides to raise its cigarette tax by one dollar, West Virginia smokers would be paying a total of $2.56 in taxes per pack.

Foster, a Democrat, estimates the buck-a-pack increase could bring in as much as $100 million in additional revenue for the state, but says the incentive for smokers to kick the habit is equally as important.

“The farther you go (with increasing the state tax), the more effective it is,” Foster said.

The senator brought up the issue during an interim meeting Tuesday after new DHHR secretary Patsy Hardy gave a presentation to a legislative oversight committee.

Foster asked Hardy whether she would support the cigarette tax hike. The secretary sidestepped the question, saying she needed more information before weighing in.

DHHR spokesman John Law told committee members the tobacco tax is “probably the best way to reduce cigarette use” in West Virginia.
However, Law said he would defer to the governor before making a decision about whether to back the increase.

Tuesday also provided the first opportunity for many lawmakers to hear from Hardy, who took over the reigns at the DHHR in September.

The secretary gave a comprehensive report on the department’s progress, highlighting several areas of concern lawmakers have brought to her attention in the past few months.

For example, the DHHR has come under fire in recent years for its consistently high number of job vacancies. Hardy said the department has hired close to 100 additional staff members in the 100 days since she took office.

Hardy also vowed to keep the lines of communication open between her department and the Legislature, addressing another criticism from lawmakers.

Several legislators have said they support the idea of dividing the DHHR into two separate departments in order to make it more effective.

The massive agency has 6,000 employees and is responsible for hundreds of programs that provide a wide range of services to state residents.

“The services impact them from the day they are born until the day they die,” Hardy said.

Delegate Don Perdue, D-Wayne, plans to push for a special committee to study the idea of splitting up the DHHR during the 2010 legislative session.

By Sara Gavin
Daily Mail, December 9, 2009

Profitability numbers from the major cigarette manufacturers and other statistics point to the continued strength of the tobacco category, despite a slumping economy and a major spike in the federal excise tax (FET) last spring, according to an industry analyst.

The strength of premium brands, especially in high-tax states, is also proving out, as is the general category of other tobacco products (OTP), “portion pouches” in particular, said speakers at last week’s CSPNetwork Tobacco Update CyberConference.

Despite falling volume numbers post FET hike, cigarette profitability is strong, according to Nik Modi, sector analyst, UBS Securities LLC, New York. “It’s remarkable to think that with unemployment, FET and [increasing] state excise taxes that price elasticity has remained constant.”

Reasons for the relational consistency between volume and retail price lead back to consumer demographics, he said. Tobacco users tend to have lower incomes on average, with 60% earning less than $40,000 per year. Relatively speaking, food inflation and gas prices—two indicators viewed as critical to lower-income citizens—have been moderate. In addition, minimum wage went up.

“Low-income consumers are in a healthy situation relative to middle-income and higher-income consumers, many of whom were impacted by housing and, earlier in year, with the [falling] stock market,” Modi said.

Premium brands have also benefitted from the tax-heavy climate, Modi said. Documenting the strength of premium in relation to state taxes, he said that in states where taxes were the highest ($1.50 or more per pack), premiums held 94% of the market. He reasoned that after already paying $5- or $6-per-pack prices, a smoker is less sensitive and will often opt to trade up.

OTP in general is faring well, according to speaker Joe Teller, director of category management for Richmond, Va.-based Swedish Match North America, which sponsored the CyberConference. A trend his company is seeing is a tie to new moist-snuff tobacco (MST) users and cigarette smokers. He said company research shows that many of the newer users are also cigarette smokers, but ones that have used MST at some time in the past. These new users are pressured by bans and other social influences to smoke less and are returning to the MST category.

Of all the subcategories within OTP, he said the “portion pouch” business is the most robust, growing 20% in the past year despite the economy.

Although cigarettes typically make up the bulk of a retailer’s tobacco portfolio, Teller said OTP shoppers visit convenience stores twice as many times as the average consumer and buy higher-ticket items.

“If these guys get more important over time, you’re going to have to focus more on the fundamentals in order for them to stay loyal to your stores,” Teller said.
By Angel Abcede
CSP Daily News, December 8, 2009

Virginia, despite joining its counterparts across the Potomac in banning smoking in bars and restaurants, stands apart in its refusal to levy heavy taxes on the sale of cigarettes.

The state takes 30 cents out of every pack of cigarettes, a pittance compared with Maryland and the District and a reminder that the Old Dominion is far from uprooting its tobacco history.

While lawmakers agreed this year to the unprecedented restriction on where someone can smoke — a victory for Gov. Tim Kaine — the General Assembly nevertheless shot down Kaine’s effort to double the cigarette levy to pay for skyrocketing Medicaid costs.

Virginia until five years ago had almost no tax on cigarettes, charging only 2.5 cents per pack. The increase to 30 cents in 2004 was the first since the tax was enacted in 1960.

That levy is the third lowest cigarette tax in the nation — higher than only Missouri and South Carolina — and less than a tenth of Rhode Island’s highest-in-the-nation $3.46 per pack charge, according to the National Conference of State Legislatures.

Maryland doubled its tax to $2 per pack in 2007. The D.C. Council matched that tax in 2008, and this year upped the ante to $2.50 a pack.

Virginia lawmakers’ reluctance to follow suit is no doubt linked to the tobacco industry’s presence in the state. Altria — the parent company of tobacco giant Philip Morris — is headquartered in Richmond and is a major campaign donor. Tobacco ranked ninth last year among the state’s most lucrative agricultural products, bringing in $83 million, according to the Virginia Department of Agriculture and Consumer Services.

By: William C. Flook, Examiner
November 30, 2009

Bulgaria’s Members of the Parliament voted Thursday to increase the cigarettes tax.

The MPs decided on second reading to establish a BGN 101 excise for 1 000 cigarettes instead of the current BGN 41, while the proportional tax will be 23% of the sales price instead of the current 40,5%. The later will affect mostly expensive cigarette brands.

The first proposal was for a tax of BGN 74 for 1 000 cigarettes and 36% of the sales price.

The tax for tobacco for pipes and cigarettes is set at BGN 100 per kg.

The opposition left-wing declared they oppose the tax hike. Kornelia Ninova, MP and spokesperson of the Bulgarian Socialist Party (BSP), defined the move as a mistake, pointing out the negotiated agreement with the EU is for lower tax and the increase would contribute to wide-spread contraband instead of curbing smoking. According to Ninova, the tax increase will hit hard the Bulgarian cigarette maker “Bulgartabac” which employees 2 000 workers.

She was backed by Aliosman Imamov, from the ethnic Turksih Movement for Rights and Freedoms (DPS) party, who also said the changes will hurt “Bulgartabac.”

The new duties will increase the price of a pack of cigarettes anywhere between BGN 1,10 and 1,40 making the price of the best-selling “Victory” brand BGN 5 instead of the current BGN 3,40.

TALLAHASSEE — It might not solve the state’s budget crisis, but a bipartisan pair of lawmakers think they’ve found another item that should be taxed: the bong.

Sen. Steve Wise, R-Jacksonville, and Rep. Darryl Rouson, D-St. Petersburg, have both filed legislation that would subject a range of pipes often used to smoke crack or marijuana to a 25 percent tax.

The charge would come regardless of whether the pipes are to be used for legal purposes or not — a way to get at so-called “head shops” that often sell the instruments while claiming they don’t know whether the pipes are going to be used for tobacco or something else.

“What we hope to do is get rid of the charade, the hypocrisy,” Rouson said.

It’s something of a personal crusade for Rouson, who can still recite from memory the date he finally broke his own substance-abuse problems. The lawmaker said he’s been clean for more than 11 years after struggling with crack, alcohol and marijuana.

The legislation, supported by the state Office of Drug Control Policy, gained no traction last year at least in part because of fears that it would become a media-driven distraction from the difficult budget issues facing the state, Rouson said.

And while Rouson suggested the revenue could be used to fund drug-treatment programs threatened by the budget crises, those ills are not the main cause for the legislation.

Instead, Wise said, the aim is to increase the cost of peddling the pipes.

“We’re trying to get to the wholesalers and jack up the price big-time,” Wise said.

Bruce Grant, director of the Office of Drug Control Policy, said law enforcement officers often have an almost impossible task in trying arrest those selling or purchasing the pipes or shutting down head shops because anyone involved can simply say the devices will be used to smoke tobacco.

“You can’t prove that someone has broken a law just because they buy a pipe or a bong or something like that,” Grant said.

There were no reported arrests in October 2005 after a large-scale federal crackdown throughout the Jacksonville area, although agents confiscated 15,800 smoking tools said to be worth about $250,000 at 10 local stores.

One area retailer who carries glass pipes and bongs said she didn’t think a 25 percent tax would hurt sales.

“It doesn’t matter what it costs. If someone wants it, they’re going to buy it. It’s not like they can blow the glass themselves,” she said, requesting not to be named.

Critics say that if lawmakers think the new tax will decrease drug use, they’re wrong.

“The idea that it’s going to stop people from smoking … is just ludicrous,” said Ford Banister, past president of the Jacksonville chapter of the National Organization for the Reform of Marijuana Laws. Banister heads the Committee for Sensible Marijuana Policy, which is pushing decriminalization measures in several Florida cities.

Banister said making it more difficult to get the pipes from a store would probably just prompt users to create their own pipes.

“You can make a bong out of an apple, out of a potato, out of pretty much anything you want to,” he said.

Grant didn’t dispute that, but said the measure could at least crimp outlets turning a profit off bongs and its kin. Hookahs, a fixture in some Middle Eastern restaurants, would not be affected by the proposed tax.

“They’re making money selling this paraphernalia to people who then go out and do something illegal,” he said.

By BRANDON LARRABEE – Florida Times-Union
Nov. 27, 2009

Prime Minister Yukio Hatoyama recently told the Diet that an increase in the tobacco tax should be considered from the viewpoint of improving people’s health. He has instructed the government’s Tax System Council to study the matter. A tobacco tax increase is long overdue; we hope Mr. Hatoyama’s effort will succeed.

The World Health Organization says, “Tobacco is the single largest preventable cause of cancer in the world today. It causes 80 to 90 percent of all lung cancer deaths, and nearly one-third of all cancer deaths in developing countries.” Smoking not only accounts for about one-third of all cancer cases but also increases the incidence of heart diseases and cerebral infarction.

The WHO Framework Convention on Tobacco Control, effective February 2005, calls on its 164 signatories to raise taxes on tobacco products as a way of reducing tobacco consumption.

Cigarettes in Japan are much cheaper than in other parts of the developed world. For example, Japan imposes a tobacco tax of ¥174 on a 20-cigarette pack, compared with an equivalent tax of ¥400 to ¥500 imposed in Europe and North America.

Every year since 2006 the health ministry has proposed raising the tobacco tax. But the Liberal Democratic Party’s Research Commission on the Tax System quashed the proposal because it feared that an increase would be unpopular with voters and negatively impact tax revenue. The change in government, however, has breathed new life into the drive to increase the tax.

A health ministry survey shows that 36.8 percent of men and 9.1 percent of women regularly smoked in 2008. The rate for men was the lowest since the survey began in 1981. In five years, the overall rate went down by 5.9 points to 21.8 percent, while the rate for men dipped 10 points. In addition, of those surveyed, 28.5 percent of male smokers and 37.4 percent of female smokers indicated that they want to quit smoking.

A steep cigarette tax hike would induce many to quit smoking. The revenue should be used to promote measures to help smokers kick the habit, improve medical services and assist those among the nation’s 12,000 tobacco farmers who would like to switch crops. The government could also discourage use of tobacco by banning smoking in public places nationwide, including restaurants.