Senate votes to repeal $50 billion tobacco tax break Provision had been slipped into bill signed last month

September 11, 1997|By KNIGHT-RIDDER NEWS SERVICE

WASHINGTON -- A chastened Senate voted emphatically yesterday to undo a $50 billion tobacco-industry break that had been slipped into the tax-cut bill signed into law last month.

Voting 95-3 to repeal the provision, senators rather contritely agreed to an amendment that unraveled what sponsor Sen. Richard J. Durbin, an Illinois Democrat, called "a sweetheart deal" for the industry.

But the repealer was nearly derailed by an amendment from Sen. Jeff Sessions, an Alabama Republican, who tried to limit the fees that can be collected by attorneys hired by the states to press damage claims against the tobacco industry. Sessions argued that the legal fees could amount to billions of dollars and are "too generous, too much of a windfall, and cannot be defended."

Durbin and his allies defeated the Sessions amendment, 50-48, by arguing that it would put states at a big financial disadvantage in their long, expensive legal jousting with the tobacco industry.

The Senate's vote on Durbin's amendment reflected not only unhappiness with the tax break, but also disdain for the manner in which it was planted in the tax bill by industry lobbyists, with a boost from House and Senate leaders, without the knowledge of most members in either house.

A similar repealing provision in the House, sponsored by New York Democrat Nita M. Lowey, faces formidable opposition from House leaders, who view it as a violation of the tax-and-budget agreement reached between congressional Republicans and President Clinton in late July.

Under a major settlement forged in June between the industry and 39 states and Puerto Rico, the tobacco companies agreed to pay the states about $368 billion over 25 years to compensate them for the Medicaid money they spend to treat smoking victims. Part of the money also would be devoted to programs that discourage smoking among young people.

When the tax-and-budget package emerged for votes in the House and Senate, it contained a provision permitting the tobacco companies to credit the money paid under a new 15-cent increase in federal tobacco taxes against the $368 billion going to the states. That tax break was estimated to reduce the industry's total liability by about $50 billion.

The three votes against the repeal were cast by Republicans from tobacco-growing states: Mitch McConnell of Kentucky, and Jesse Helms and Lauch Faircloth of North Carolina.

Pub Date: 9/11/97

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