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Lawmakers should tax cigarette makers equally

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The Tampa Tribune

Published: March 3, 2010

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."

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