Tobacco Buyout Bill Introduced

Source from:  Bowling Green (KY) Daily News By Scott Sisco 06/07/2004

Lawmakers hopeful new legislation helps embattled Kentucky farmers Kentucky lawmakers are upbeat about the prospects of a tobacco buyout after a bill was introduced Friday in the U.S. House of Representatives. The measure is part of a bill to restructure corporate tax breaks in response to tariffs the European Union has imposed on U.S. exports – the result of a World Trade Organization ruling that current U.S. corporate tax law illegally helps American exporters – said Rep. Ron Lewis, R-Cecilia. The buyout would do away with the program while paying tobacco farmers about $9.6 billion by a portion of the 39-cent federal tax on each pack of cigarettes. With Phase II tobacco settlement payments, the program will be worth $12.6 billion, Lewis said. The legislative package was put together by Rep. Bill Thomas, R-Calif., chairman of the tax-writing House Ways and Means Committee, after the Senate passed a restructuring and expansion of corporate tax breaks last month. The Senate bill doesn't include the tobacco buyout. The bill will be tweaked and could go to the House floor the next week, Lewis said. "I think it has an excellent chance of passing the house," he said. After that, the House and Senate bills would go into a conference committee, where differences would be ironed out, Lewis said. One issue to be decided is what role the Food and Drug Administration will play in the control of tobacco. This is the first time buyout legislation has been attached to a bill that must pass, he said. The EU sanctions have cost exporters about $4 billion since March 1st. "They are starting to affect all of our exporters," he said. Under a buyout, growers would be paid to give up government-granted tobacco allotments that establish how much leaf they are allowed to sell each year. Their livelihood has suffered in recent years due to a decrease in smoking and an increase in imports of cheaper tobacco. The cost of growing tobacco also has increased, primarily because of the expense of leasing tobacco quotas – something that would be eliminated with a buyout. The buyout received support from President Bush this week, a turnaround from his earlier statement that the program didn't need to change. Lewis said he was at the White House a couple of weeks ago and asked the president if he could support a buyout. "He smiled and nodded in a positive way," Lewis said. The White House was involved in putting the finishing touches on the buyout bill, he said. "I think the president is going to be very supportive of this," he said. Kentucky's Senate delegation is also behind the measure. "I support a sensible buyout for Kentucky farm families," Sen. Jim Bunning, R-Ky., wrote in an e-mail to the Daily News. "We have to help them, and this looks like a good proposal that will give them a solid buyout and let them keep their Phase II money. "It is still going to be an uphill struggle to get it enacted into law, but I am cautiously optimistic about this latest proposal and we are going to keep working on it until we get something done." Sen. Mitch McConnell R-Ky., introduced a buyout bill last year, but it never passed. McConnell's proposal received support from lawmakers in tobacco-growing states, but others balked at the cost. There also was disagreement among farmers, lawmakers and others about which production year would be used as a basis for the buyout. There are no details with the current proposal about how a buyout would be handled if approved. "I support any measure that gets us closer to the goal of securing a buyout for our tobacco growers," McConnell wrote in an e-mail to the Daily News. "While it's too early to break out the champagne, I applaud the House for taking this important step in the right direction." Enditem