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Doyle spokesman defends proposed $1.25 per pack hike

MADISON — Big Tobacco has its eyes on Wisconsins anti-smoking legislation, with some companies actively lobbying against the bills $1.25 a pack increase on the cigarette excise tax.

Philip Morris USA sent a publicity team to Madison recently to warn of the potential hazards that large excise taxes have on the health of a states economy, and how a dramatic increase in such taxes negatively affects consumers.

“These kinds of increases can cause more problems than they solve,” said Bill Phelps, spokesman for Philip Morris USA, the largest cigarette maker in the country and a subsidiary of Altria Group. “They also put an unfair tax burden on a group of people who are already heavily taxed.”

Joining the opposition are R.J. Reynolds, the second-largest tobacco company in the United States, and Lorillard, Americas third-largest tobacco company.

Both companies said they are engaged in some form of lobbying efforts against the initiative that was originally proposed by Gov. Jim Doyle.

Doyles spokesman Matt Canter blew smoke on the tactics of Big Tobacco, saying their efforts will have no bearing on public support, or on the ability of the measure to pass the Legislature.

“Wisconsin citizens will not be swayed by special interests,” Canter said on Friday. “Like the governor, they support clean air and healthy families.”

Canters remarks came one day after a public hearing was held on the bill. Crowds of people packed the hearing chambers and filled two overflow rooms at the Capitol.

Most of the comments focused on the statewide smoking ban, which would prohibit smoking in public places, workplaces, restaurants and taverns.

As for Philip Morris USA, the more critical issue is the economic affect that the bill would have on cigarette wholesalers, retailers and consumers of cigarettes.

“When you have a large increase it gives people the incentive to look for other places from which to purchase their cigarettes,” said Phelps, adding that consumers might turn to other states, the Internet and Native American outlets to find cheaper cigarettes.

He cited a case in northwestern Iowa where a small town has seen increased traffic from neighboring South Dakota to buy smokes after that state increased its excise tax by $1 earlier this year.

Phelps also said that cigarettes are an unstable and declining source of tax revenue, and that governments cannot rely on their projections to meet budget needs.

In the tobacco companys literature is a chart that indicates tax-paid cigarette sales have declined in Wisconsin for the past 11 years by 1.7 percent each year.

Steve Kottak, director of communications for Reynolds American — the parent company of R.J. Reynolds — said his company is working with its retail and wholesale customers on getting the word out on how the excise tax might affect their businesses.

“At $1.25 per pack, some of the economic studies that we have seen show that it will have a dramatic effect on lost sales, both for retailers and wholesalers in Wisconsin, as well as job loss,” said Kottak.

He said Reynolds American estimates that the average convenience store in Wisconsin would lose about $21,000 in profits, based on the $1.25 increase. To make up that loss, he said, the stores would have to sell about $118,000 in gross retail sales.

A spokesman for Lorillard said the company is working indirectly on lobbying efforts, and working mainly through Wisconsin distributors.

By Karen Lincoln Michel
Press-Gazette Madison bureau


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