Guam Cigarette Companies Profit By Hundreds Of Millions

Source from:  Guam News Factor (gu) 06/12/2009

GUAM - While cigarette smoking continues to be the culprit for the top four leading causes of death for people on Guam, Guam's medical community is making a proactive approach to raise taxes for distributors of cigarettes. The Guam Medical Society (GMS) has selected Dr. Jerone Landstrom as Guam's delegate to the American Medical Association's (AMA) annual meeting this weekend. Landstrom will be armed with a compelling resolution that represents the first salvo in what is certain to be a fight to raise the price of smoking tobacco products on Guam. The resolution submitted by the GMS has been noted by the AMA for presentation and for potential action. The Guam Medical Society Resolution is based on volumes of research and data that shows that significantly raising the cost of cigarettes reduces the number of individuals who start smoking (especially children) and increases the number of current smokers who quit smoking. Guam's retail prices for cigarettes remain among the lowest in the nation, while the prevalence of adult smokers on Guam remain the highest among all 50 states, districts, territories and insular areas. The Guam Department of Revenue and Taxation collects dollars from tobacco wholesalers and deposits those collections into what is called the Healthy Future Fund. Cigarette distributors pay Rev & Tax 35 cents per every 100 cigarettes; which equals 7 cents per pack (each pack contains 20 cigarettes). In Fiscal Year 2008, the Healthy Future Fund collected $7,455,611.12. Using the tax rate and the value reported as collected from cigarette distributors when assuming a conservative retail fee of at least 2 dollars per pack of cigarettes, an astonishing number is generated. With the conservative retail price estimate of one pack of cigarettes at 2 dollars, the tobacco industry grossed more than $213,017,460 during Fiscal Year 2008. The overwhelming truth is cigarette prices range between $2.50 and $3.89, so actual revenues amassed by cigarette distributors are staggering. Even with a conservative estimate, a meager $7.5 million in taxes collected against $213 million in gross revenues is hardly an amount to boast as a means to offset the crippling current and exponentially increasing devastation cigarette smoking has on the people of Guam. What is even more troubling is that Guam law exempts wholesalers of tobacco from paying the four percent business privilege tax, meaning that wholesalers are only required to pay a fixed rate of seven cents per pack of cigarettes sold. That means, given the conservative estimate above, tobacco wholesalers are exempt from paying as much as $8 million-plus in taxes. Clearly tobacco sales are a lucrative and profitable business; profitable enough for tobacco wholesalers to wield strong political influence. As the Guam medical community takes on this quarter-of-a-billion-dollar industry, they must be prepared to face the full arsenal of political and financial resources that "big and rich tobacco on Guam" will use to stop any increase in the price of cigarettes - even if it means saving the lives of our people. Enditem