Legislators to Consider Leaf Buyout

Source from:  By George A. Chidi, Rocky Mount Telegram 06/11/2004

The proposed tobacco quota buyout has navigated further through Congress than ever this year, but its $9.6 billion weight may sink the tax repeal bill it's sailing on. Republican leaders attached the buyout to the American Jobs Creation Act, a change in export tax rules mandated by the World Trade Organization. The bill is expected to leave committee next week and may reach the House floor June 17 or 18. Each month that goes by without action from Congress to repeal certain export tax breaks costs exporters an additional 1 percent in escalating retaliatory tariffs on sales to the European Union. The WTO targeted products from Pennsylvania, Florida and other election swing states with its March tariff ruling. "This will mean a lot to Eastern North Carolina. You have farmers just hanging on." said U.S. Rep. Bob Etheridge, D-2nd District. Under the proposal, tobacco quota owners who also farm their own land would get $10 for each pound in the quota they would be giving up. Farmers who rent other people's quota to grow tobacco would get $3 per pound, with the quota owners getting $7 per pound. "Some bill will pass," Etheridge said. "And that's the advantage, having it attached to a bill that has to pass." Other representatives noticed the same advantage and are also piling on their own projects. Because the export tax repeal is the only bill likely to pass during the rest of this election year, House members have tacked on special tax provisions to give a compensatory 3 percent income tax break to companies. It also contains about 350 pages of other tax breaks for specific industries, such as NASCAR track racing, makers of small planes and energy companies. Some representatives rebelled against the bill's deficit spending, so Republican leaders attached the tobacco buyout to attract the votes of tobacco-country congressmen. By doing so, the revenue-neutral Senate version has become a $34 billion bill. "It is fiscally irresponsible to pay for a grower buyout with taxpayer funds," said Matthew Myers, president of the Campaign for Tobacco-Free Kids, an antitobacco lobbying organization. "The buyout ... is being paid for by taxpayers, not the tobacco companies who will benefit by cheap tobacco." Unlike previous versions of a buyout bill, the House version doesn't contain provisions to prevent tobacco growing in counties that have not historically produced, he said. The rule would help protect small farmers from competition from giant agribusiness, he said. "The day after this passes, the price of tobacco is going to drop like a rock," he said. "The buyout has no production controls, no price protection and no geographical restrictions on where tobacco can be grown. This is just a massive transfer of wealth to cigarette makers." Myers said his group supports a buyout as long as it contains strong provisions for tobacco regulation by the U.S. Food and Drug Administration. The House version of the buyout contains no FDA regulation of tobacco, which is likely to cause some senators to reject it, he said. "There are plenty of members of congress that don't believe in a buyout, but would go along with a buyout if it contained strong FDA regulation," Myers said. Republican House leaders oppose FDA regulation of tobacco, however. Etheridge has already heard of complaints about losing the FDA provision from the Senate, including U.S. Sen. John McCain, R-Arizona, and Senate Finance Committee Chairman Charles Grassley, R-Iowa. When the Senate and House meet to reconcile the different versions of the bill, FDA approval will arise in discussion, Etheridge said. "That's a conference issue – always will be." Enditem