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Texas tobacco tax law matches ALEC model legislation introduced in other states

A 2009 law that changed the way Texas levies taxes on chewing tobacco, raising the tax but shifting the burden onto smaller companies, matches other bills introduced since then in other states. A recently released archive of model legislation drafted by the American Legislative Exchange Council, with industry participation, includes a similar bill.

The Texas measure was introduced two years ago by state Rep. Al Edwards, D-Houston, as a $100 million tax increase to help fund a medical school loan repayment program for rural doctors. (Edwards was unseated in 2010 by Rep. Borris Miles, also a Democrat.)

The taxed chewing tobacco by weight, instead of price, and though it was a tax hike, it passed with broad bipartisan support.

But a handful of smaller tobacco companies cried foul after the bill’s passage from the state Senate. In press release, National Tobacco president Ron Tully said, “It is unfortunate that the Texas Senate, with little debate and what appears to be little understanding of the real market, passed a large tax increase on the small companies that compete with the ‘Marlboro(R) Man’ and ‘Copenhagen(R) Man,’ not realizing such a tax hike will do little to sustain these programs going forward.”

Tully went on:

“Philip Morris, which now has over a 50% share of the cigarette market and over a 50% share of the smokeless tobacco market, is pushing for this weight-based tax on almost all tobacco products, simply to take out the small competitors in the market and make its smokeless and smoking brands the dominant market players. Interestingly Philip Morris has managed to maintain an exemption from this new weight-based tax for its popular Black and Mild(R) cigar products. Texas will now have the unpopular distinction of being among only a few of the 50 states that have elected to switch to a punitive weight-based tax on many tobacco products.”

“When doctors who have historically opposed smoking, stand with Philip Morris, you know it has got to be a bad deal for someone. If Philip Morris is supporting a tax on the tobacco industry, you also know it must be a good deal for them and the brands they sell. And it is,” Tully says.

The tobacco giant’s parent company, Altria Group, sits on ALEC’s private enterprise board, as **ProPublica noted in a recent overview **of the group’s model bills, billing the weight-based tax as a market fairness correction.

Propublica singled out a report from the Milwaukee Journal-Sentinel, on a similar bill in Wisconsin. In Wisconsin, columnist Daniel Bice wrote, “the measure was pushed by Altria, the parent company of Philip Morris USA, which would have benefited from it because it manufactures smokeless tobacco products that are far lighter than those of other manufacturers.”

While much of the ALEC coverage in the last few weeks has focused on draft legislation backing big-picture reforms for immigration, education and health care law, the tobacco tax legislation is an example of the finely targeted bills that benefit a few member companies, couched in terms of another public interest.

In Wisconsin, the measure would’ve ultimately lowered tax revenues from the tobacco tax, and Gov. Scott Walker vetoed it before signing the state’s latest budget. Similar laws have been passed recently in Oregon, and the City of Philadelphia. Chewing tobacco has long been taxed by weight in Alabama, Arizona, and North Dakota.

State Rep. Alan Ritter, R-Nederland, introduced a bill this year to lower the state’s chewing tobacco tax again, which never made it to the House floor for a vote.

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