State Senate Favors Higher Tobacco Taxes

The Florida Senate appears to have come to consensus on a $1 a pack cigarette tax increase, plus comparable taxes on other tobacco products including cigars - news that raised an alarm for Tampa's cigar industry Monday.

A bipartisan group of senators announced the proposal in a news conference, calling it a health measure rather than a way to lessen the state's monster budget shortfall.

"It's not a revenue-raising exercise for us; it's an issue of public health," said Sen. Thad Altman, R-Viera, chairman of the Senate finance and tax committee.

Still, he said, the measure would "provide tax fairness" because nonsmokers' taxes now pay about $1.25 billion a year in Medicaid costs to treat tobacco-related illnesses.

Altman said the proposal would add a $1 an ounce surcharge to smokeless tobacco, pipe and roll-your-own tobacco. The legislators couldn't provide information Monday on exactly how their proposal would affect cigar prices.

The bill's sponsor is Sen. Ted Deutch of Boca Raton, part of the Democratic minority in the Senate. However, Altman's endorsement, plus news releases announcing the measure that come from the staff of Senate President Jeff Atwater, suggest the approval of Republican leadership.

The state House, which must agree to any such measure, hasn't proposed a plan for closing the deficit and is more hostile toward tax increases, including tobacco taxes, than the Senate.

A few hours before the news conference, a group of lobbyists for major tobacco companies made a case against such a measure to House leaders including Speaker Larry Cretul, R-Ocala, and budget chief Ellyn Bogdanoff, R-Fort Lauderdale.

Larry Williams, representing tobacco giant Reynolds American Inc., said a per-pack surcharge on cigarettes could decrease overall state revenue.

Cutting the number of smokers and forcing them to cheaper brands, he said, would cut the amount they pay in sales tax and cut the amount the companies pay under the settlement of the state's 1990s lawsuit against tobacco companies. Those payments are based in part on the amount of cigarettes sold.

He said the lawsuit settlement payments already are less than projected, about $387 million instead of $440 million yearly, because higher prices have caused people to quit or switch to brands not included in the lawsuit.

The senators proposing the tax couldn't say exactly how much money their proposal would raise or exactly how it would be spent, although they said their intent is that it go toward health care.

Altman said he would be happy if it cut tobacco use.

"We're hoping it doesn't raise revenue; we hope it cuts consumption," he said.

The state budget shortfall hovers somewhere in the neighborhood of $6 billion, and it has been estimated that a cigarette tax would produce about $800 million a year.

Tampa cigar industry officials were scrambling late in the day to find out how they would be affected.

"We're like David getting squashed by Goliath," said Eric Newman of Tampa's J.C. Newman Cigar Co., who also is president of the Cigar Manufacturers Association of Tampa and chairman of the Cigar Association of America.

He said lobbyists for the association were working on the question in Tallahassee.

"We're trying to explain to some of these elected officials that cigars are a home industry; it's like taxing citrus," he said.