Posted on 02/09/2003 7:21:54 AM PST by SheLion
CHICAGO, Feb 7 (Reuters) - They're pariahs in restaurants, outcasts in offices, and taxed to the max on their cigarette habit, but smokers are coming to the rescue of state budgets.
Governors coming off election battles with promises of no major tax increases are proposing that smokers pay higher cigarette excise taxes as a way to help fill gaping holes in state budgets.
They are also counting on smokers to keep buying cigarettes despite the higher taxes so states can generate an estimated $246 billion they are expecting to receive over 25 years from settlements with U.S. tobacco companies.
Meanwhile, the number of places where smoking is permitted are shrinking in several cities, where bans -- particularly in restaurants -- have been proposed or enacted.
"It's almost like a new apartheid. Instead of being race it's habit," said Neil McGregor, owner of Port Royal, a tobacco shop in Toledo, Ohio, who was part of a group that successfully battled a county health department-imposed smoking ban last year. "And it's being demonized with the huge amount of money that came from the tobacco settlement."
He estimated that up to 35 percent of Ohio tobacco sales have migrated to the Internet as the state's budget woes led to a cigarette tax hike last year and another proposed tax increase this year.
PRESSURE TO QUIT
"I think if you continue to increase cigarette prices at the same rate and make it difficult for people to smoke, there will be an increase in the decline of smoking," said Wesley Moultrie, a tobacco company analyst at Fitch Ratings.
A decrease in smoking would translate into a decline in tobacco sales, which in turn would mean less money going to states under the settlement agreements, although that was a long way off, he said.
"Firms so far have been able to manage through it," Moultrie said, adding however, "that threat is real and is still out there."
A recent Fitch report showed that 21 states increased their cigarette taxes last year to help fill budget shortfalls or to encourage smokers to quit. Smokers in New York City pay $1.50 in a state tax, which last year was raised 39 cents per pack, and another $1.50 in a city tax. As a result, Fitch said cigarette sales in the nation's most populous city have fallen significantly.
Tobacco companies contend that imposing higher taxes on smokers drives them to buy from untaxed sources such as Indian reservations and the Internet, encourages the overseas production of counterfeit cigarettes and promotes interstate smuggling -- factors that eventually cut into states' tax collections.
"It just doesn't seem to make sense in the long run," said John Singleton, public affairs director at R.J. Reynolds Tobacco Company (RJR), pointing out that governments need a more reliable source of revenue.
Many states are revisiting cigarette taxes this year as a way to help fill budget gaps made wider by the national economic slowdown. Facing a whopping budget deficit estimated between $26 billion and $34.8 billion over 18 months, California Gov. Gray Davis has proposed a $1.97 per pack cigarette tax, which would be the highest among the states.
Governors in states such as New Jersey, Delaware, Missouri, Indiana, Georgia and West Virginia have also included cigarette tax hikes in their proposed budget fixes.
"They need the money and they go where they think they can get away with it," said Andy Ludlow, treasurer of FORCES (Fight Ordinances & Restrictions to Control & Eliminate Smoking), a nonprofit group started in 1995 that opposes smoking bans and campaigns for smokers' rights.
He said his organization, with around 2,000 dues-paying members, faces an uphill battle against other well-funded anti-smoking groups such as the American Lung Association.
"We're fighting against people who rake in hundreds of millions of dollars," Ludlow said. "There's no way we can go against them."
Indeed, some tobacco settlement money is being used to fund anti-smoking efforts, although states have increasingly siphoned off those funds to patch their budgets.
Unlike the anti-smoking faction, smokers, who make up roughly 23 percent of the adult population, lack a united front and receive no monetary support from tobacco companies to battle taxes or bans, according to Ludlow and others.
SMOKING BANS ENACTED
Dallas was one of the most recent cities to tighten restrictions on smoking. The city council last month passed an ordinance banning smoking in public places such as restaurants, bingo parlors, bowling alleys and beauty shops, effective March 1. March will also bring a sweeping smoking ban to New York City, in virtually all workplaces, including restaurants, bars and nightclubs.
Chicago is even considering ordinances that could stop people from lighting up on golf courses and in sports stadiums.
The smoking ban movement makes sense as people have an increased understanding of the harm of second-hand smoke, said Bronson Frick, associate director of Americans for Nonsmokers' Rights, a nonprofit organization that promotes smoke-free environments.
"Elected officials are responding to that increased public concern," he said.
Ah, but does he still get his last cigarette before being shot. :-}
Then, along came this group of ANTI SMOKE haters, started receiving lots of MONEY through the Tobacco Settlement Money, and now here we sit.
I have been rolling my own now for almost two years. One carton for under $8.00 and NOT paying into the rabid dog state coffers anymore. Happy? You bet I am.
We still have three restaurant/bars up here that accommodates smokers, and THAT'S who gets our money.
That's the ticket, Great Dane. Just ban the damn stuff and save everyone all this grief. But we all know they won't.
They have taxed it so high that people are forced to buy elsewhere. Tobacco is the highest priced legal commodity in the United States. The Government is making a mockery of us AND smoking. They can't live without our tax dollars, and yet they won't let us smoke in most places of leisure. Beside the money, I'm still trying to find out the logic behind all of this. Is there any???
Ah HA! Which reminds me. hehe!
~snicker
I just wish they'd service me for once instead of vice versa.
In realiity I am just boycotting doing favors for anyone.
Pertinent statement here.
They are using the money that smokers who buy premade cigarettes provide them to demonize smokers.
We need to get the word out more to ALL smokers to but from the net and make their own.
Basis?
"Stan Glantz said it, I believe it, and that settles it!"
Don't know why, truck drivers brings new customers, it has alway been said,"Eat where the truck drivers eat, they know where the good food is."
From the KING of "ad hominem attacks."
F.O., tacis.
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