R.J. Reynolds Fights ‘Tax Profiling’ of Smokers

Feb 15, 2002

New York City Mayor Michael Bloomberg on Wednesday proposed raising the cigarette
tax from 8 cents to $1.50 a pack, on top of the state cigarette tax. His goal is to raise
$250 million. According to the National Conference of State Legislatures, 44
states are facing a budget shortfall, and 19 of those are considering raising
cigarette taxes – ranging from 10 to 61 cents per pack. R.J. Reynolds Tobacco
Co. is opposing cigarette tax hikes in a number of states, decrying the “tax
profiling” of adult smokers. The state and federal governments collect 15 times
more from the sale of every pack of cigarettes than does R.J. Reynolds Tobacco
Company, said Tommy Payne, executive vice president of external relations for
R.J. Reynolds Tobacco Co., addressing a proposed 122-percent cigarette tax hike
in Connecticut.

RJR also emphasized that, while federal and state governments collect more
than $29 billion annually in tax and payments under the Master Settlement Agreement,
according to the Centers for Disease Control only six states meet the minimum
guidelines for spending on tobacco control. Furthermore, according to the U.S.
General Accounting Office, 36 states spent zero or less than 10 percent of MSA
funds on tobacco control. “The money is being spent on bridges, roads, deficit
reduction, and more bureaucracy,” RJR said.

Moderator Comment: Considering the demographic profile
of adult tobacco consumers, is the government placing an unfair tax burden on
this group of people?

It is the height of hypocrisy for states to take the
tobacco companies to court and then fail to spend the dollars on tobacco control
negotiated as part of the settlement. Nothing new for government to engage in
‘do as I say not as I do’ activity.

New York’s new mayor may expect to raise an additional
$250 million in revenues but what he has more likely accomplished is increasing
sales of cigarettes (and the products purchased with them) in the suburbs. [George
Anderson – Moderator

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