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Exposing Big Tobacco's Loophole Lie

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By YOLANDA NADER

Special To The Tampa Tribune

Published: March 30, 2009

A column on Florida's out-of-court settlement with Big Tobacco companies contained confusing statements about our company and cries out for clarification ("All Cigarette Makers Should Pay Up," Other Views, March 23). The son of the late Gov. Lawton Chiles needs money for his prenatal care group and has somehow been persuaded to get it through a new tax on only a few cigarette companies while exempting the four giants.

While we applaud efforts to improve children's health care, Lawton Chiles III has borrowed twisted arguments from operatives for these very same Big Tobacco companies his father fought so passionately and successfully against. The Marlboro Man and Joe Camel did not ride into the sunset. They boarded corporate jets and flew to the bank with crocodile tears while increasing their prices by more than $1.25 per pack to cover the estimated 40-cent cost of the out-of-court Florida settlement. With arbitrary price hikes like that, of course they lost some state market share. So what? They have raked in record profits ever since and, acting like a monopoly, continued to raise prices with no regard to market share loss.

Marlboro and Joe are back - even trickier than before - and on a stealthy mission in Tallahassee to squash Dosal, Florida's only manufacturer. This family-owned company has made "no-name" generic and Cuban-blend cigarettes in Opa-Locka since 1963. The family started over in this country after losing everything to Castro's communists. They re-established their lives and their business and have worked hard, played by the rules, paid their taxes, taken care of their employees and stayed in Miami even as costs drove hundreds of other South Florida manufacturing companies out to low-cost, low-wage states and foreign countries

Sadly and ironically, Big Tobacco firms from North Carolina and Virginia are letting child advocacy groups campaign for this narrow, unfair tax. Why use advocates? Some tobacco companies tried on their own to push through this "phony loophole" tax on Dosal in 2004. It was rejected by lawmakers, so this time they are using some well-meaning groups and advocates like Mr. Chiles.

They are spreading the tired myth that Dosal was (and I quote) "left out of the Florida tobacco settlement because they made up just 2 percent of the cigarette market. ..." This is utter nonsense. What judge ever dismissed a defendant because of small-market share? The court record is clear: Dosal was sued and then dismissed from the Florida case because the company had no involvement in the Big Tobacco conspiracy. Dosal did not participate in the decades of wrongdoing, such as the "Council for Tobacco Research" that Gov. Chiles and his dream team trial attorneys uncovered through discovery, depositions and secret documents.

History is repeating itself, as Big Tobacco is using the "tax loophole lie" to scam legislators, the media and the public. Arrogantly they are pushing the Legislature to apply their agreed-to punitive damages installments to Dosal, which did not even participate in the punishable acts.

There was no mention that Dosal is subject to the same Florida cigarette excise taxes as the giant out-of-state manufacturers. Dosal also pays the same federal excise taxes, which were increased more than 150 percent by Congress in February (effective April 1, 2009) to pay for children's health coverage.

Big Tobacco knows exactly what will happen if this new Florida tax is slapped only on Dosal while exempting premium brands. The little guys lose market share and either go out of business or leave the state and take their jobs with them. This happened in Minnesota, where tobacco lobbyists pushed through identical legislation in 2004. In a matter of months sales shifted from discount to name brands (not subject to the tax) and collections of the new tax fell millions short. Only the exempt companies that lobbied for the tax benefitted.

Big Tobacco companies, with quarterly profits in the hundreds of millions, need no bailout, bonus or special favors from the Legislature. To the contrary, they have posted rising profits since they agreed to make settlement payments.

Making Dosal pay a new tax to "equalize" a litigation outcome in which it had no culpability is simply and undeniably wrong. Dosal asks only for fair and equitable tax treatment. Let companies compete responsibly in the free market and under the American system of equal justice for all.

Yolanda Nader is the CEO and CFO of Dosal Tobacco Corp, the only cigarette manufacturer in Florida.

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