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[NATO NEWS]
Legislative wrap up
State legislation
The 2008 legislative year will probably rank at the top of the list for fewest cigarette and tobacco tax increases enacted by state legislatures. In fact, only three states enacted a cigarette tax increase this year. New York raised the state cigarette tax from $1.50 per pack to $2.75 per pack, the highest tax rate in the nation. Following New York was Massachusetts, which increased the cigarette tax from $1.51 per pack to $2.51 per pack.
Then, New Hampshire adopted a trigger tax of an additional 25 cents per pack that takes effect if the state did not collect $50 million in cigarette tax revenue during July, August and September of 2008. The delayed implementation is based on the probability that New Hampshire will be the beneficiary of cross-border cigarette sales with its current tax rate of $1.08. This is substantially less than its three neighboring states with Maine at $2 per pack, Vermont at $1.99 per pack and Massachusetts at $2.51 per pack.
While these three states did enact a cigarette tax increase, legislation in 12 other states that proposed a tax increase on cigarettes did not become law. The states with unsuccessful tax increase bills included Alabama, Florida, Georgia, Illinois, Kansas, Kentucky, Maine, Mississippi, Nebraska, Rhode Island, South Carolina and Utah.
However, attempts to increase taxes were not limited to just cigarettes. In 2008, 14 states introduced bills to raise tax rates on other tobacco products including cigars, smokeless tobacco and pipe tobacco. Two of these states enacted bills changing the manner in which moist snuff is taxed with New York implementing a 96-cent per ounce tax rate and Utah adopting a 75-cent per ounce tax rate.
With regard to smoking restrictions, three states enacted smoking bans while bills in eight other states did not pass. Iowa enacted statewide smoking restrictions to prohibit smoking in public places, which includes bars and restaurants and exempts the gaming floors of casinos. In Nebraska, smoking will not be allowed in bars, restaurants or other public places beginning June 1, 2009. The final smoking restriction law was enacted in Pennsylvania, which also banned smoking in bars and restaurants.
Federal legislation
In July, the U.S. House of Representatives passed a bill granting authority to the Food and Drug Administration (FDA) to regulate tobacco products. The bill has not yet received action by the full U.S. Senate, although the bill did pass the Senate Health, Education, Labor and Pensions Committee. With only about three weeks of floor time in the Senate during September, it was uncertain, at press time, whether the U.S. Senate would have time to debate the FDA legislation.
During the first week of September, Democrats in the U.S. House decided not to vote for a third time to expand the State Children’s Health Insurance Program by $35 billion through increases in the federal cigarette and tobacco tax rates. The Democrats did not proceed because there were insufficient votes to override an expected third veto of the bill by President Bush and the cost estimate for the bill increased with no other funding mechanism except tobacco taxes to raise the funds to expand the program.
NATO coordinated a nationwide effort with other retail and wholesale trade associations to oppose a third SCHIP expansion bill. These efforts included working with NATO members to have them personally meet with their U.S. Representatives while they were back in their home states during the month of August. In addition, NATO sent commentary letters-to-the-editor to 225 major newspapers in those states represented by U.S. Representatives that voted against the SCHIP tax increase bill late last year urging continued opposition to the bill.
Depending on the outcome of the November elections, the SCHIP bill may be reintroduced for consideration by Congress in 2009. TR
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