NATO’s Launches Nationwide Initiative to Stop Tax Increases

On July 2nd, NATO launched an unprecedented effort to urge state lawmakers and governors to tax non-tobacco products if they intend to seek additional revenue to fund programs. This effort involved NATO mailing a personalized letter to more than 7,100 state legislators and all 50 state governors warning them that an increasing number of states which have raised cigarette and tobacco taxes in the past eighteen months have either collected less tax revenue than before the latest tax increase or collected far less than the estimated amount of additional revenue.

NATO President Andy Kerstein noted that “This initiative represents NATO’s greatest effort to date in being proactive to educate state legislators about the negative fiscal ramifications of further increases to cigarette and tobacco tax rates.” As explained in NATO’s letter, a point of diminishing returns has now been reached. The letter provides tax collection information from New Jersey, Michigan, Wisconsin, Tennessee, Maine, New Hampshire and Vermont that clearly undermines the pervasive mindset that raising cigarette and OTP tax rates will guarantee an unending steam of revenue. A copy of the letter accompanies this E-News.

This initiative by NATO will expand with NATO News articles to be published in numerous magazines including Tobacco Outlet Business magazine, Tobacco Retailer magazine, Smokeshop magazine, NPN magazine and CSP Magazine. Following through on its past success in publishing letters-to-the-editor in newspapers, NATO will send commentary letters-to-the-editor to newspapers around the country with the goal of informing elected officials and the public about the need to focus on taxing other products.

SCHIP Expansion Bill May Get Another Vote

On July 19th, Congressional Quarterly Today reported that U.S. House Democratic leaders may attempt to bring up for a third vote a bill which would significantly expand the State Children’s Health Insurance Program (SCHIP). The expansion of the program would be paid for through the single largest federal tax increase on cigarettes and tobacco products in the history of the United States. President Bush vetoed the bill twice and the U.S. House did not have the required number of votes to override either of the President’s vetoes. After the second veto, President Bush signed a bill into law extending the SCHIP program through March, 2009 at the current funding levels.

According to the CQ Today story, “a House Democratic leadership aide said a new SCHIP vote is ‘a strong possibility,’ and another House Democratic aide said that the party’s success with the Medicare bill (HR 6331) had encouraged its leadership to again challenge Republicans on SCHIP.” However, the CQ story also reports that Republicans are skeptical about the chances for SCHIP passage because the scope of the legislation is so much narrower than the Medicare bill which just passed Congress. Moreover, Representative Diana DeGette (D-Colorado) is also referred to in the CQ Today article as being cautionary about another SCHIP vote and that numerous details have yet to be worked out before the measure is brought to the House floor.

Following close on the heels of NATO’s nationwide letter campaign launched on July 2nd to urge state lawmakers and governors to tax non-tobacco products to raise revenue because of the diminishing returns experienced by recent state cigarette and tobacco tax increases, NATO is preparing to hand deliver a similar letter to all 535 U.S. Senators and Representatives to educate them about the significant revenue shortfall that is likely to occur if the federal cigarette and tobacco tax rates are increased to pay for the SCHIP expansion. The letter will also encourage members of Congress to tax non-tobacco products to expand the SCHIP program.

FDA Bill Update: U.S. House May Vote in July

The Dow Jones Newswires service reported on June 23rd that U.S. Representative Henry Waxman expects the U.S. House to vote on the pending FDA legislation sometime in July. Representative Waxman is the chief author of the FDA bill in the U.S. House. Even if the U.S. House votes on the legislation, the fate of the bill is uncertain in the U.S. Senate which has not taken final action on the matter. Also, the Bush administration has not put its support behind the bill believing that the FDA does not have the financial resources nor the personnel to regulate an entire industry.

AWMA & NATO Issue Joint Letter on FDA Bill

The American Wholesale Marketers Association (AWMA) and the National Association of Tobacco Outlets (NATO) have issued a joint letter to all 435 U.S. Representatives outlining serious concerns that the two national organizations have with the pending bill in Congress to grant the U.S. Food and Drug Administration the authority to regulate tobacco products.

In the joint letter, three main concerns about the FDA legislation are highlighted. First, the bill grants the FDA virtually unlimited powers to adopt future regulations based solely on public health concerns without taking into account the negative impact such regulations would have on distributors and retailers. Second, the bill grants the FDA, other federal agencies, states, counties and cities the express authority to virtually prohibit the distribution, sale, advertising, promotion, possession and use of tobacco products. Third, the “user fees” that would be charged to manufacturers to fund the FDA regulation would amount to $7.6 billion over the first ten years of regulation which would more appropriately be labeled a new tax to be paid by consumers that purchase tobacco products.

In short, the joint letter concludes that the FDA bill "is a complex piece of legislation that creates a new federal bureaucracy to enact onerous regulations that will likely place hundreds of wholesalers and thousands of retail stores in jeopardy of going out of business with the consequent laying off of untold millions of employees."

R.J. Reynolds Expands NoCigTax Website Nationwide

Cigarettes are one of the most heavily taxed consumer products in the United States.  In the last 10 years, there have been 93 cigarette excise tax increases in 45 states and the District of Columbia.In the effort to defend against an increase in the federal excise tax (FET), R.J. Reynolds Tobacco Company developed and launched www.NoCigTax.com in 2007.  During the year, there were more than 30,000 visits to the site, generating more than 120,000 contacts to elected officials.

Based upon this utilization of the website,www.NoCigTax.com has been redesigned to also include information on state cigarette excise tax issues. NoCigTax.com provides a platform where retailers and wholesalers can quickly and easily engage in the political process, making their voice heard on proposals to increase state and federal cigarette tax rates. Click on the link below to visit www.NoCigTax.com

Visit www.NoCigTax.com

State Tobacco Legislative Update

Andrew Kerstein (NATO President), Bob Sunblad (Smoke'm Phoenix), Bob Roberts (Smoke'm Phoenix), Mitchel Hirsh (Cigar King), Robert Hesla (11th Avenue Liquor and Smoke Shop) and Mary Szarmach (NATO Vice-President). Not Pictured: Joe Valls of Wilsonville Liquor.

Both Altadis, U.S.A. and Nat Sherman International were recognized for their commitment to NATO and their respective lobbying efforts on tobacco legislative issues. Each of these companies were well deserving of the 2008 NATO Pinnacle Awards.

Andrew Kerstein (NATO President), Joel Sherman (Nat Sherman International), Jim Colucci (Altadis, U.S.A.) and Mary Szarmach (NATO Vice-President).

NATO Legislative Monitor

NATO maintains a chart on each tobacco-related bill that the association is monitoring and acting upon in the states and at the federal level. Click here to see the complete NATO legislative monitor chart.

Cigarette and Tobacco Rate Tax Maps

The maps below show the current cigarette tax rates in all 50 states and the current tax rates on other tobacco products for each state.

• Excise Tax Rates Colored
• OTP Excise Map

NATO Manufacturers & Distributors Directory

Click here to view our new directory of manufacturers and distributors NATO members.

The NATO website now includes a new page filled with manufacturer and distributor company logos, contact information, product summaries and hotlinks to each member’s website. Retail members are encouraged to visit this new page to learn about NATO manufacturer and distributor members and the products they offer. This is a unique service to assist NATO retail members find manufacturer and distributor websites. For those manufacturers and distributors that have not yet sent in their logo, contact information and website address, please forward that information to NATO at info@natocentral.org.