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November 3, 2006

A Newsletter of the National Association of Tobacco Outlets, Inc.

SCHIP and FDA Bills Not Passed by Congress

 ith the 2008 session of Congress rapidly coming to close, the bills to expand the State Children's Health Insurance Program (SCHIP) by $35 billion through higher federal cigarette and tobacco taxes and to grant the FDA the authority to regulate the tobacco industry were not passed by Congress. 

egarding SCHIP, the Democrats in Congress decided not to proceed with a third attempt to pass a bill expanding SCHIP after having the bill vetoed twice last year by President Bush.  Specifically, a lack of votes to override an expected third veto of the SCHIP bill and a limited amount of time to act due to other pressing economic and energy issues forced the Democrats to back off bringing the SCHIP bill up for a vote.

n FDA, the U.S. House passed its version of the FDA bill, but time constraints along with the urgency of the financial system bailout legislation resulted in the U.S. Senate not  voting on its version of the FDA regulations. Even so, NATO continues to work  to on changes to the retail provisions of the FDA bill that could severely impact retailers and their continued ability to sell tobacco products.

nce again this year,NATO played a leading role in the fight to oppose the SCHIP bill.  In July, NATO President Andy Kerstein, NATO Federal Legislative Director Jackie Cohen, NATO retail member Bob Roberts of Smoke’m Phoenix in Arizona and NATO Executive Director Tom Briant traveled to Washington, DC and met with Senator John McCain’s staff to communicate the association’s concerns about the SCHIP tax increases and proposed retail regulations under the FDA bill.

n addition, NATO staff worked closely with retailers to set up personal meetings with U.S. Representatives in August to urge opposition to the SCHIP bill.  NATO also coordinated a joint letter with five other national trade groups to target 160 U.S. Representatives who oppose SCHIP and submitted commentary letters-to-the-editor to 225 major newspapers nationwide

A Leader in Advocacy on Tobacco Issues

With the outcome of the upcoming presidential elections potentially having a dramatic impact on tobacco retailers and tobacco consumers, I urge you, your employees and your customers to be active citizens and vote on November 4^th.

Congress will be adjourning its 2008 session without taking a vote on a third SCHIP bill and without the U.S. Senate voting on its version of the FDA tobacco regulatory legislation.  This means that both of these bills could be, and most likely will be, brought up for consideration when Congress convenes early next year.

In anticipation of the upcoming election, NATO researched the voting records of the two major party presidential candidates and a summary of their respective positions on SCHIP and FDA can be found on the back page of this newsletter. 

Briefly, Senator John McCain voted against the SCHIP bill while Senator Barack Obama voted for the bill.  In addition, even though Senator McCain is a co-sponsor of the FDA bill, recent news reports indicated that he is declining to embrace FDA regulation of the tobacco industry. Senator Obama is also a co-sponsor of the FDA bill and supports the passage of the FDA bill.

There are approximately 40 million smokers and tobacco users in the United States and these Americans constitute the single largest minority group in the country.  This group of tobacco consuming Americans cannot be silent and need to be educated about the importance of voting on November 4^th.  The gravity of the SCHIP bill and FDA retail regulations is so serious that your future as a tobacco retailer could depend on the outcome of the election.   

-Andrew Kerstein, NATO President

his November, NATO members will be voting to elect five retailers, two manufacturers and two wholesale/ distributors to serve a two year term on the NATO board of directors. To be eligible for a board seat, a candidate must be an owner, partner, shareholder, officer or employee of a NATO member and make a commitment to attend board meetings and participate as a member on one or more board committees. The board meets four times a year (two times by conference call and two in-person meetings). Please call NATO Executive Director Tom Briant at 1-866-869-8888 by November 7th if you would be interested in being a candidate for a NATO board seat.

NATO E-News Bulletins

ne of the best ways to keep up-to-date on tobacco legislation and NATO’s efforts is to sign up for NATO’s E-News Bulletins that are one page electronic newsletters. The NATO E-News Bulletins are also used as an action alert mechanism to quickly inform all NATO members about critical tobacco legislation. The E-News Bulletins are e-mailed or faxed to NATO members only. Call the NATO office at 1-866-869-8888 or e-mail the NATO staff at info@natocentral.org to be placed on the E-News distribution list.

2008 State Legislative Success

uring 2008, NATO and its members posted an 80% success rate in helping to defeat state cigarette/tobacco tax increases and statewide smoking restrictions. Despite continued efforts by anti-tobacco organizations and state legislatures to further tax tobacco products and restrict smoking, NATO’s success is due in large part to the grassroots action taken by NATO members to urge their state senators and representatives to oppose these tobacco bills.

nly three states enacted higher cigarette tax rates this year including Massachusetts, New Hampshire and New York as shown in the chart below. However, the New Hampshire tax will take affect only if the state’s cigarette tax collections do not equal $50 million for the months of July, August and September of 2008.

State Cigarette Tax Increases

moking restrictions were passed in three states during 2008.  The Iowa and Nebraska legislatures passed bills not allowing smoking in public places, workplaces and bars.  Pennsylvania’s smoking restriction law does not allow smoking in most public places and exempts bars which have limited food service.

Killing the Golden Goose

n an unprecedented effort, NATO mailed a letter dated July 2, 2008 to all 7,100 state lawmakers and 50 governors alerting them to a disturbing trend regarding state cigarette and tobacco tax increases.  The excerpts below from the letter sent by NATO Executive Director Thomas Briant sounded the alarm bells about the diminishing returns of further tax hikes. 

“Dear Governor, Senator and Representative:

The recent experience by a growing number of states should serve as a fiscal forewarning to all lawmakers that increasing cigarette and tobacco tax rates to collect more revenue is no longer a viable solution.  Further increases in cigarette and tobacco tax rates will virtually guarantee that a state will collect less tax revenue than before the tax increase or fall substantially short of budget revenue estimates.  It is time for state lawmakers to focus on taxing non-tobacco products if they seek additional revenue to fund programs.

 In the past eighteen months, New Jersey, Michigan, Wisconsin, Tennessee, Maine, New Hampshire and Vermont have raised cigarette and/or tobacco taxes only to subsequently collect less tax revenue than before the latest increase or unexpectedly collect far less than the amount projected.

 A point of diminishing returns has now been reached regarding tax increases on cigarettes and tobacco products.  The mindset that taxing cigarettes and tobacco products at ever higher rates will result in an unending stream of revenue is clearly undermined by recent state fiscal data. 

 These facts demonstrate that sound state budgeting practices should focus on alternative revenue sources to fund government programs rather than raising cigarette and tobacco taxes.

 Sincerely,

 Thomas A. Briant, NATO Executive Director

How the Presidential Candidates Stand on Key Tobacco Issues

Issue No. 1:  SCHIP (State Children’s Health Insurance Program)

 The State Children’s Health Insurance Program is a federally funded program in which states receive federal dollars to provide health insurance for children in low income families. The SCHIP legislation seeks to expand the program by another $35 billion over five years and increase the federal cigarette and tobacco tax rates. The most recent version of the SCHIP bill which was vetoed by President Bush would have raised the federal cigarette and tobacco tax rates as follows:            

Senator John McCain:  Voted AGAINST the SCHIP bill and the cigarette/tobacco tax increases.

Senator Barack Obama:  Voted FOR the SCHIP bill and the cigarette/tobacco tax increases.

Issue No. 2:  FDA (Food and Drug Administration Regulation of Tobacco)

 Legislation pending in the U.S. Senate would grant sweeping authority to the Food and Drug Administration to regulate cigarettes and smokeless tobacco products.  The legislation would ban all color tobacco advertising in retail stores, assess a “user fee” on manufacturers (which could be considered a tax) totaling $7.8 billion over five years, and expressly grant in writing to federal agencies (other than the FDA), states, counties and cities the authority to ban the distribution, promotion, sale, possession and use of tobacco products.

 Senator John McCain:  Co-sponsor of the Senate FDA bill, but in early August news reports indicated that Senator McCain no longer embraces FDA regulation and would not commit to voting in favor of the FDA bill.

 Senator Barack Obama:  Co-sponsor of the Senate FDA bill and supports the legislation.

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