Panel Votes $1.50 Cigarette-Price Rise despite GAO Study

By Goldreich, Samuel | The Washington Times (Washington, DC), May 15, 1998 | Go to article overview

Panel Votes $1.50 Cigarette-Price Rise despite GAO Study


Goldreich, Samuel, The Washington Times (Washington, DC)


The Senate Finance Committee yesterday voted to raise cigarette prices by $1.50 per pack, upping the ante on a tobacco bill headed for the Senate floor even as the General Accounting Office reported that such a boost would promote a black market.

The finance panel meeting demonstrated how momentum for a tough bill to curb youth smoking has overwhelmed GOP leaders' efforts to stop members from using it as a vehicle to raise taxes.

Overriding the objections of Chairman William V. Roth Jr., Delaware Republican, the committee voted 10-9 to increase the cost of cigarettes even more than the $1.10 per pack proposed in a bill passed last month by the Commerce Committee. The Commerce measure, patterned loosely after a national lawsuit settlement proposed by tobacco companies and state attorneys general, is scheduled for Senate floor debate Monday.

"The Finance Committee has voted to price children and teen-agers out of the tobacco market," said finance panel member Sen. Bob Graham, Florida Democrat.

But opponents criticized the effort to drive up cigarette prices, citing a GAO report released yesterday that examines the potential impact a drastic hike could have on smuggling and underage smoking.

In Canada, the study pointed out, sharp tax increases on tobacco drove a contraband market that accounted for 60 percent of all cigarette sales in Quebec in 1993. The GAO also reported that high tobacco taxes in Washington and Michigan cause those states annual revenue losses of $51 million and $105 million, respectively.

At the same time, the GAO estimated that youth smoking would decline nationwide by between 4 percent and 9 percent for each 10 percent increase in the price of cigarettes.

Various tobacco bills seek a 60 percent cut in underage smoking within 10 years. Using the GAO estimate, that means a $1.50 increase in cigarette prices on top of the current $2 per pack would lower teen smoking rates anywhere from 30 percent to 67. …

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