State Sen. Thad Altman, R-Melbourne, has introduced a bill this session that he says would remove “a big tax loophole” for one Florida-based tobacco company.
A similar bill was introduced last year, but a threat that Gov. Rick Scott would veto the bill eventually killed it.
Senate Bill 1414 would impose “a fee on the sale, receipt, purchase, possession, consumption, handling, distribution, and use of non-settling manufacturer cigarettes that are required to have a stamp affixed or stamp insignia applied to the package of cigarettes on which tax is otherwise required to be paid.”
The measure would seek fees, more specifically, from Dosal, a tobacco company based in Miami that was not part of the 1997 Florida Tobacco Settlement Agreement. Because the company is not part of that settlement, it has been exempt from paying the same taxes and fees that other tobacco companies are paying, Altman argues.
Altman’s legislation is one of the rare moments when Big Tobacco and health advocates have come together on an issue. When this bill came up last year, a coalition of groups called the Citizens for Fairness in Florida stood behind the bill. Included in the coalition were Florida CHAIN, a statewide health advocacy group, and retailers.
The coalition was made possible because the money from tobacco companies has paid billions through the years to the Lawton Chiles Endowment Fund. By law (.pdf), the state uses “tobacco settlement moneys to ensure the financial security of vital health and human services programs in the state.” Because more money could be going to health services, health advocates have stood by the attempts to levy the tax on Dosal.
Big Tobacco has also been a big proponent of legislation like Altman’s, because they argue companies like Dosal have an unfair advantage in the marketplace. Altman says the company has gained a huge advantage from the current “loophole,” including an 18 percent market share, because they are able to sell cheaper cigarettes.
When the bill has come up in the past, Dosal has cried foul.
The South Florida Sun Sentinel reported in March 2011 that lawyers for Dosal have argued “that imposing a fee on the company would be unfair”:
Dosal, they say, wasn’t involved in the alleged industry practices, such as manipulating the nicotine content of cigarettes, that triggered the wave of lawsuits against major tobacco makers in the 1990s.
Dosal’s chief executive, Yolanda Nader, said the company’s value pricing has helped fuel its robust growth. Cigarette prices in Florida range from about $4 a pack for Dosal and other bargain brands to about $6 a pack for Philip Morris’s Marlboros.
“We feel the government should not be picking winners and losers,” Altman says.
Altman points out that the money lost for health services is substantial. Policy-makers have debated whether the state is missing out on $50-90 million a year, but Altman says he believes the number is closer to $200 million.
Altman says that, considering the amount of cuts health services have taken in the past couple of years, the bill should be seriously considered. As of now, Altman’s bill does not have a House sponsor; a spokesperson for Scott’s office says there is currently no update on his position on the issue.
Dosal allegedly fought against last year’s bill with help from a West Palm Beach-based tea party group.
