Cigar tax proposed in Senate Levy would end tax-free status, increase prices

March 18, 1998|By Alec Klein | Alec Klein,SUN STAFF

Alarmed by tobacco marketing tactics and the rise of teen-age smoking, a trio of state senators is leading a legislative effort to introduce a cigar tax that would end a long-standing tobacco exemption in Maryland.

All 13 members of the Senate Budget and Taxation Committee yesterday received a letter calling for action from Democratic Sens. Christopher Van Hollen Jr. of Montgomery County and co-sponsors of his tobacco bill, Paul G. Pinsky of Prince George's and Nathaniel J. McFadden of Baltimore.

"It makes absolutely no public policy sense to tax cigarettes but not to tax another tobacco product when all the evidence suggests it's just as dangerous," Van Hollen said.

Maryland, historically a difficult state in which to enact tobacco legislation against a strong lobby, is one of only eight states without a cigar tax. The sweep of legislation across the country began nearly two decades ago when about 19 states taxed cigars.

The Maryland cigar tax, which would raise funds to educate the public about the product's health hazards, is part of a broader tobacco bill, sponsored by 17 senators and backed by the governor, which would also increase levies on cigarettes and impose a new tax on smokeless tobacco.

Committee to vote

A committee vote is expected within 10 days, Van Hollen said. With about a month to go in the General Assembly session, the overall bill faces intense opposition from lawmakers reluctant to vote for a tax in an election year while the state enjoys a budget surplus. But Van Hollen said, "If we can't get the entire bill forward, there may be ways of getting parts of it through."

Sen. Barbara A. Hoffman, chairman of the Budget and Taxation Committee, said she likes the tax proposal but doesn't know if it has "a reasonable shot."

"I would like to tax smokeless tobacco and cigars because neither is taxed," the Baltimore Democrat said.

Opposition expected

The cigar industry intends to fight the measure. "We're concerned about any government mandated action that raises the product's price to the consumer," said Norman F. Sharp, president of the Cigar Association of America. "It's unfortunate that smokers have come to be seen as such an easy target to raise revenue for programs that benefit society in general. It's discrimination."

But Van Hollen's proposal reflects similar levies in other states. The bill calls for a 25 percent tax on the wholesale price. For a cigar that retails at $5, the tax would mean a price increase of about 25 to 50 cents.

As part of the rationale for the proposed tax, the senators cited in their letter a three-part series on the cigar industry published in The Sun in January.

"The articles reveal that the cigar industry has exploited marketing techniques that have been outlawed with respect to cigarettes," states the letter, accompanied by copies of the newspaper stories. "The cigar industry's advertising campaign has resulted in a dramatic increase in cigar use among all segments of the population, including youth."

The articles documented how cigar makers planned their resurrection over nearly two decades, targeted women, the young and the wealthy, manipulated the media and used Hollywood to glamorize cigars in a practice forbidden to the cigarette industry. The articles also showed how the industry eluded government regulators.

Unchecked, the industry has grown exponentially in the 1990s, attracting startling numbers of young smokers. In 1996, nearly 27 percent of teen-agers nationwide reported smoking a cigar the previous year, the Centers for Disease Control and Prevention reported recently.

"The purpose of the bill is to reduce teen smoking," said Vincent DeMarco, executive director of the Maryland Children's Initiative, which is spearheading the tobacco tax proposal. "According to [former U.S. Surgeon General] Dr. C. Everett Koop, one of the best ways to do that is to increase the cost of tobacco."

'Tobacco is tobacco'

The proposed cigar and smokeless tobacco taxes would raise an estimated $3.4 million in fiscal 1999, $4.6 million in 2000 and $4.8 million in 2001.

"This is a problem, and it's going to continue to be a problem unless we look at this in a realistic way," said Glenn Schneider, community organizer for the Smoke Free Maryland Coalition, a co-founder of the Maryland Children's Initiative. "All tobacco contributes to the disease and death problem we have. Tobacco is tobacco."

Pub Date: 3/18/98

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