Despite Industry Decline, Tobacco's Clout Strong in N.C.

Source from:  Associated Press Writer by STEVE HARTSOE 05/11/2004

Smoking opponents plan a renewed push for higher cigarette taxes in the nation's No. 1 tobacco state as the General Assembly returns to session Monday. But they're not holding their breath. Recent efforts to raise the tax from 5 cents per pack - the country's second-lowest rate - didn't even get a vote. Despite huge declines in North Carolina's tobacco economy, proponents of a higher tax say the industry maintains a strong grip on state lawmakers. "It is the perception among people that it is still a viable part of our economy, and when you look at the numbers, it is not," said Peg O'Connell with the North Carolina Alliance for Health, a statewide coalition of public and private groups that argue that raising the tax would deter people from lighting up. "We North Carolinians, we love our traditions and we love our past." Competition from overseas leaf growers, reduced demand by manufacturers and an increased focus on biotechnology as a future job-generator in the state have crushed the leaf's prominence in North Carolina. In recent years, tobacco production has dropped by half and the number of growers has fallen 39 percent. Rep. Jennifer Weiss, D-Wake, said she plans to introduce a bill to raise the cigarette tax in the short session that begins Monday. While the Senate has shown support for an increase, House Co-Speaker Jim Black and Gov. Mike Easley, both Democrats, have said they foresee no tax increases this session. The federal Centers for Disease Control says smoking-related illnesses kill 11,500 North Carolinians and more than 400,000 Americans each year. Proponents argue that boosting the excise tax would discourage smoking and provide revenue to cover some of the $4 billion the state spends each year on smoking-related health costs. But the tobacco industry and others say cigarette taxes are regressive, given that minorities and the poor smoke at a higher rate than the rest of the population. "It's forcing a disproportionate number of poor, minority adults to surrender more of their money to the government so that teenage smoking rates can be marginally impacted," said John Hood, president of the conservative John Locke Foundation, a nonprofit think tank in Raleigh. John Singleton, spokesman for Winston-Salem-based R.J. Reynolds Tobacco Co., said a tax hike would further damage the state's tobacco economy. Singleton noted that states already receive money from the 1998 tobacco master settlement - money that is supposed to be spent on health costs. Instead, states including North Carolina have dipped into those funds to stave off budget shortfalls, he said. "It's really unfair to target smokers when money available now is not going to health programs and smoking cessation," Singleton said. The average nationwide tax on cigarettes is about 73 cents a pack. In major tobacco states such as North Carolina, South Carolina, Kentucky, Georgia and Tennessee, the tax averages 12.4 cents per pack, according to the Campaign for Tobacco-Free Kids. Virginia, home to the nation's No. 1 cigarette-maker, Philip Morris, used to rank lowest nationally. But lawmakers last month raised the tax from 2.5 cents - where it had been since the mid-1960s - to 20 cents a pack to help balance the state budget. The Virginia tax is to rise to 30 cents next year. Also underscoring Big Tobacco's ongoing clout in North Carolina is a 1993 law that prevents local governments from enacting flat-out bans on smoking in most businesses. The law allows individual business owners to operate smoke-free or with smoking sections; local governments may ban smoking in buildings they control. And municipalities that had smoking ordinances on the books before the law was passed were allowed to keep them. Ken Hite made his Raleigh pizza parlor, Wildflour Boston Pizza, smoke-free a few years ago, after customers complained about cigarette smoke. The decision hasn't hurt business, he said, adding that some smoking customers eat their food in the smoking section at the adjacent Cozumel Mexican Grill, which he also owns. "When people come in and say 'Do you have a smoking section?' nine times out 10 they'll eat in here anyway," he said. Similar preemption laws exist in about 22 states, including several tobacco states. But there are signs of change. In Kentucky - home to the nation's lowest cigarette tax - the state Supreme Court last month upheld a no-smoking ordinance in the bars, restaurants and other public buildings of Lexington, the heart of the burley tobacco belt. No such proposals are on the radar screen in North Carolina, the top producer of flue-cured tobacco. Rep. Rex Baker, a Stokes County Republican and former RJR executive whose district includes the company's Tobaccoville cigarette plant, is one of many legislators determined to keep North Carolina's preemption law in place. "Oh, I think it's a good law," he said. "Otherwise, you'd have local governments going bananas passing laws." Enditem