TRADE TALK: News from NATO - January/February 2008
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By Thomas A. Briant, Executive Director, National Association of Tobacco Outlets |
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Federal TaxesWith Congress passing the State Children’s Health Insurance Program (SCHIP) legislation twice and President Bush vetoing the measure twice, the outcome of this “dance of legislation” may not be resolved until next year. If the SCHIP program is extended for a short period of time without a cigarette and tobacco tax increase, there is a good likelihood that Congress will bring the issue back up for debate next fall before the 2008 general elections. In either case, the war over raising the federal cigarette and tobacco tax rates to pay for an expanded federal subsidized health insurance program for children in low-income families may not be over until sometime after the 2008 election results are tabulated and we know which party controls the White House and Congress. State Taxes and Smoking BansDuring 2007, 15 states proposed raising state cigarette taxes and seven states actually enacted tax increases. Regarding other tobacco products, nine states introduced bills to raise the tax on cigars, smokeless tobacco, pipe tobacco, and/or roll-your-own tobacco products. The OTP tax was actually increased in four of these states. On an additional positive note, on November 6, voters in Oregon rejected a ballot question that would have increased the cigarette tax by 84.5 cents per pack and raised the OTP tax from 65 percent to 95 percent of the wholesale price. What is becoming clear is that governors and state legislators are more than willing to continue to consider cigarette and OTP tax increases to fund expanded health care initiatives, solve budget deficits, and pay for other social programs. Besides tax increases, 16 states considered statewide smoking restrictions in restaurants, bars, clubs, and bowling alleys. This year, nine states adopted some kind of statewide restrictions, focusing mainly on restaurants and bars. Killing the Golden GooseWith all of these attempts to raise more revenue from cigarettes and tobacco products, a point of diminishing returns has been, or is close to, being reached. That is, as the tax rates for cigarettes and OTP products continue to rise, governments will collect less revenue than when these products were taxed at a lower rate. There is now empirical evidence that cigarette or tobacco tax increases passed in New Jersey, Maine, and South Dakota have resulted in those states collecting less cigarette and/or tobacco tax revenue than when the products were taxed at a lower rate. In the case of New Jersey, Governor Corzine successfully proposed raising the cigarette tax from $2.40 per pack to $2.575 per pack, which led to the state collecting $23 million less in fiscal year 2007 than in 2006. It is clear that the temptation to continue to raise more revenue by increasing tobacco taxes will be tempered by this new evidence that the goose is no longer laying golden eggs. If governments persist in enacting social programs and raising spending to pay for these programs, then elected officials will need to turn to raising revenue from other sources than cigarette and tobacco products. NATO Annual DinnerOn the evening of Wednesday, April 23, 2008, the NATO Annual Awards Dinner will be held; and once again retailers, wholesalers, and manufacturers will come together to celebrate the industry and recognize NATO members that have gone above and beyond the call in opposing tobacco legislation. This semi-formal affair will be held in the chandelier-lit ballroom at the Las Vegas Hilton Hotel and promises to be a first class evening. Tobacco Plus Expo ShowImmediately following the NATO Annual Awards Dinner, the 2008 Tobacco Plus Expo Trade Show will be held on April 24 and 25 at the Las Vegas Convention Center. This is the one trade show that tobacco retailers of all kinds need to attend. For the 2008 show, attendees can expect to see not only the latest and greatest in tobacco products and tobacco accessories, but also take time to learn how to make their businesses better by attending industry-oriented educational seminars. For the first time, a special theater is being set up on the trade show floor so that retailers can see new products unveiled by manufacturers and learn about special services offered by exhibitors. While attendee brochures will be mailed to retailers in the near future, retailers can visit the Tobacco Plus Expo web site at www.tobaccoplusexpo.com to learn more about this upcoming and exciting tobacco trade show. Join NATOIf you want help to protect your business, you need to belong to NATO. To join, visit the NATO web site at www.natocentral.org and complete and send in the membership application form that you will find under the “Join NATO” button. • |
NATO NEWS: Federal Tobacco Legislative Outcomes Uncertain
Based on the 2007 legislative year, 2008 may be another year in which numerous state and federal tobacco issues are proposed by state legislatures and in Congress. While NATO and its members will plan on once again actively opposing tobacco-related legislation, the association will also look forward to bringing the industry together at the 2008 NATO Annual Awards Dinner and participating in the 2008 Tobacco Plus Expo Trade Show.