While a Senate committee began hearings on bills to increase sales taxes and tobacco taxes, another bill has been advanced that would increase the cost of a 12-ounce can of soda.

The Senate Assessment and Taxation Committee began hearings over raising tobacco taxes by 55 cents and will continue hearings regarding Kansas Gov. Mark Parkinson’s plan to increase the state sales tax by 1 percent from 5.3 percent to 6.3 percent for three years.

The soda tax, which was advanced by Sen. John Vratil, R-Leawood, increases the tax on soda by one penny for every teaspoon of sugar — or an estimated 10 cents — and would raise an estimated $90 million during the next fiscal year, which begins on July 1.

“It is amazing just to see how much can be generated,” said Sen. Les Donovan, R-Wichita, chair of the Assessment and Taxation Committee. “There is a lot more consumed than I could have ever dreamed.”

Both the tobacco and sales tax increases would constitute an overall increase of just over $377 million in the state general fund receipts in the next fiscal year. Currently, the state is facing a projected $467 million shortfall for FY 2011.

“We’re hoping that the gap is not that broad,” Donovan said. “If it is we have bigger problems than we thought.”

Vratil proposed his soda tax during a meeting of the Senate Ways and Means Committee, which agreed to sponsor it. The committee also agreed to sponsor a bill that doubles the per-gallon taxes paid by distributors of beer, wine and liquor and the tax that retail stores pay on their gross receipts. That measure would raise an additional $50 million.

As for the tax increases that the Assessment and Taxation Committee started hearings for Tuesday — in favor of the Governor’s increases — Donovan said that state agencies are warming up to the proposal.

“There are a lot of people that get the funding that are excited about us discussing these tax increases,” Donovan said. “They get the money … that is a pretty good connection and without the tax increases, they are not going to get the funding they need.”

The testimony came on the same day that advocates for the disabled staged several small protests at the Statehouse.

The tobacco tax proposal would increase the cigarette tax by 55 cents, to $1.34 a pack, and to quadruple the tax on other tobacco products to 40 percent.

Hearings on tax increases will continue today with cigarette tax opponents and Donovan said hearings are scheduled to continue into next week.

“When we start hearing the other parts of the bill — soft drink tax bill and liquor bill — there will be hearings on each one of those,” Donovan said. “We want to give everyone a fair hearing and exhaust all possibilities to help those that get the funding while trying not to destroy those that are being taxed.”

By Matthew Clark, Eldoradotimes

As the Legislature prepares to reconvene next week, a new poll released this week reveals that 73% of Georgia voters support raising the tobacco tax by $1 per pack to cut the state’s budget deficit and help preserve Medicaid funding in the state.

This support comes from a broad-based coalition of voters, including 72% of Republicans, 79% of Democrats and 65% of Independents. Even half of smokers (50%) support the tobacco tax increase to preserve health care funding.

“Now is the time for legislators to listen to the 73% of Georgia voters who want to raise the tobacco tax instead of cutting critical programs. These results show that, regardless of party, voters across Georgia understand raising the tobacco tax is a smart way to cut the deficit and protect our kids from tobacco,” said Danny McGoldrick, Vice President for Research at the Campaign for Tobacco-Free Kids.

The survey of 500 registered Georgia voters was released by a coalition of groups including the American Heart Association, American Lung Association, American Cancer Society and the Campaign for Tobacco-Free Kids and was funded by the Robert Wood Johnson Foundation.

Increasing the tobacco tax also is by far the most palatable approach to addressing Georgia’s budget woes. While 71% of voters supported increasing the tobacco tax for this purpose, more than two-thirds opposed every other option presented, including increasing state income and sales taxes, implementing a grocery tax and a hospital bed tax, and reducing funding for education and health care programs.

“Georgia faces many tough decisions this year, but raising the tobacco tax is the only one that will protect our kids and also lower healthcare costs for years to come,” said John Daniel, Vice President, Federal Georgia & Emerging Issues for the American Cancer Society.

The survey also found among Georgia voters:

* 60% are more likely to support candidates who favor the proposal, while just 19 percent are less likely to do so.
* 77% favor taxing other tobacco products such as cigars and smokeless tobacco at a rate comparable to cigarettes.

A recent report by the Campaign for Tobacco-Free Kids and other public health organizations found that a $1 increase in Georgia’s tobacco tax would raise $354.5 million in new annual revenue.

Such an increase would also prevent 79,600 Georgia kids from smoking, save 38,400 state residents from premature, smoking-caused deaths and save $1.8 billion in tobacco-related health care costs.

Georgia’s current cigarette tax is 37 cents per pack, which ranks 47th in the nation and is well below the national average of $1.34 per pack.

The survey was conducted by the polling firm Public Opinion Strategies.

The statewide poll has a random sample of 500 likely Georgia voters and was conducted Feb. 23 to Feb. 25 of this year. The poll has a margin of error of +/- 4.38 percentage points.

Chula Vista Mayor Cheryl Cox and two council members this week shot down a proposal their colleagues made that would have required retailers to obtain a license and pay annual fees up to $300 to sell tobacco.

Councilmen Steve Castaneda and Mitch Thompson were looking for a way to keep better tabs on retailers that repeatedly sell smokes to minors. The ordinance they wanted to bring forward would have provided funding for undercover stings with underage decoys posing as customers.

Opposing council members and merchants said the proposal amounted to taxing small businesses. Merchants also refuted statistics from Castaneda and Thompson showing that nearly 75 percent of Chula Vista retailers have sold tobacco products to minors.

There are 63 cities in the state that have similar licensing requirements, including El Cajon and San Diego.

Chula Vista’s discussion stemmed from a pitch Castaneda made in January that the city ban tobacco sales within 600 to 1,000 feet of schools. When he received no support for that proposal, Castaneda and Thompson formed a task force to come up with ideas on how the city could add teeth to existing laws that ban tobacco sales to minors.

Over the last two months, the councilmen met with community members, merchants, police, social services agencies and health organizations while reviewing studies to get a better understanding of the issue and how people feel about it.

“This is not like sending a man to the moon for the first time,” Castaneda said in an interview before the Tuesday council meeting. “There are 63 other municipalities in the state doing this.”

Even though Castaneda’s council colleagues said they agree that cracking down on tobacco sales to minors is important, they are concerned that taxing businesses in order to pay for undercover tobacco stings is too much.

“This might be too harsh on the financial side,” said Councilman Rudy Ramirez. “To set out this blanket program for everyone, even those who are compliant, may be too much.”

Castaneda and Thompson said they will continue with their efforts to crack down on illegal tobacco sales and try to find other resources to pay for undercover stings.

By Tanya Sierra, Signonsandiego

A Florida judge reduced an almost $300 million verdict against Altria Group Inc.’s Philip Morris USA unit to $38.9 million in a lawsuit brought by a former smoker who suffers from emphysema.
“The court found that the jury’s verdict was grossly excessive and unsupported by the evidence presented at trial,” the cigarette maker said yesterday in an e-mailed statement.

A Fort Lauderdale jury last year awarded Cindy Naugle $56.6 million in compensatory damages and $244 million in punitive damages. The jury found Naugle was 10 percent responsible for her injuries and reduced the compensatory damages by that amount.

Naugle started smoking in 1968 when she was 20 years old. Bob Kelley, a lawyer for Naugle, said in a phone interview that he will appeal the judge’s decision.

Philip Morris also said it will appeal, saying that no damages were warranted.

The suit was one of about 4,000 filed after a 2006 Florida Supreme Court decision decertifying a statewide class action. The court allowed smokers to sue individually and extended the time for them to do so. The $300 million award was the largest tobacco verdict in Florida since the Supreme Court decision.

By Edvard Pettersson, Businessweek

SAN FRANCISCO — While the second major snow storm in a week hit the eastern U.S., leading retailer and supplier executives in the convenience store channel met to discuss the industry’s future Tuesday afternoon here at NACS’ second annual Leadership Summit.
The two opening speakers gave very upbeat and hopeful presentations to kick off the conference on a high note.
Mike Szymanczyk, chairman and CEO of Altria Group, opened the first general session by noting “many of the perceived barriers to success in the tobacco category could be viewed as opportunities.”

Szymanczyk acknowledged retailers worries about rising taxes on tobacco and new FDA regulation. But he noted that too many take a narrow view of the category and focus just on the large cigarette segment and don’t appreciate the sales and profit gains being achieved in other tobacco products (particularly smokeless and machine-made large cigars). He pointed to Apple Computers as an example of a company that was mired in a challenging computer market until it redefined its market as the “digital lifestyle” and created a host of success products, from the iPod to the iPhone to the iPad.

“If all we see when we look at tobacco is new taxes and FDA, we’d be letting a lot of opportunities pass us by,” said the CEO of the largest tobacco supplier. He noted while the cigarette category has been declining by 2-4 percent per year, the smokeless and cigars categories have grown by 12 percent per year in average sales per store over the past five years. Indeed, total tobacco poundage sold declined by only 1 percent in the past five years, said Szymanczyk.

On top of that, the growth in the OTP category has resulted in tobacco makers providing an increasing diversity of new products for adult tobacco users. “We need to expand our view to include existing tobacco user preferences in the OTP category,” he added.

He also presented an interesting view of industry profits during these difficult economic times. Last year, he said, tobacco profits among manufacturers were up 2 percent and for retailers it was even higher. “Compare that to the banking and auto industries,” said the CEO. “While other industries were getting bailouts, tobacco was contributing even more to tax revenues.”

Szymanczyk was confident that the total tobacco category will grow and that convenience stores’ portion of total tobacco sales will increase from its current 67 percent share.

Following Szymanczyk, Alain Bouchard, president and CEO of Alimentation Couche-Tard, North America’s second largest convenience store chain, gave an equally passionate, yet self-effacing vision of the future. “My credentials as a visionary are not the greatest,” began Bouchard. “We do everything in our power not to guess at the future.”

He went on to explain: “when you analyze consumers regularly over a long time, you get a feel for what is coming … it all starts at the store and what the consumer does when he or she enters the store.”
Couche-Tard has grown into a $16 billion, 6,000-plus convenience store retailer through three major strategies, according to Bouchard. The first is understanding the customer. The retailer views every market as local and invests in sophisticated measurement and analysis in each of its 11 geographic divisions, followed by constant exchange of best practices between divisions.

The second strategy is management discipline. The retailer has historically maintained a strong balance sheet and is very conservative about taking on debt. In addition, despite the many acquisitions made, Couche-Tard is known for its rigorous acquisition strategy, said Bouchard.

And finally, Bouchard cited the retailer’s people. “We believe in utilizing our human resources. We are highly decentralized which leads to an extremely motivated and enthusiastic staff.”

Bouchard added, “Our vision is one of unlocking the human potential in our people through training and empowering them. Where else can you be 25 years old and running a $10 million business?”

NACS chairman Jay Ricker, who is also president of Ricker Oil Co. based in Anderson, Ind., introduced the two speakers and noted this year’s NACS Leadership Forum was focused on two categories that are extremely important to convenience stores: tobacco and foodservice.

NACS Leadership Forum continues Wednesday and Thursday in San Francisco.

By Don Longo, Csnews

Richmond Metropolitan Habitat for Humanity got the go-ahead yesterday from Richmond — and a commitment of $225,000 from the city, the largest to date — for its first mixed-income community.

The Pillars of Oakmont is a 15-home community that will be built at T and 33rd streets in Richmond’s East End near Armstrong High School. The units will be energy-efficient row houses sold at different price points based on the income of the buyer.

It is the first mixed-income Habitat-built community for the region and possibly the country.

“After waiting, hoping, dreaming and fundraising, we just got the green light,” said Leisha G. LaRiviere, president and chief executive officer of Richmond Habitat.

The city is contributing funding through the Department of Housing and Urban Development’s Home Program and the city’s Capital Improvement Plan.

Altria Group Inc., The Altria Foundation, Philip Morris USA and the Altria Companies Employee Community Fund are major partners, contributing a combined $120,000 to the $4 million project.

An investment pool of national banks is providing a $1 million loan through Habitat for Humanity International.

Fulton Bank is extending a $750,000 line of credit. “We’re happy to be part of the vision — a bold project for Habitat for Humanity,” said Oliver Way, president of the Central Virginia region for the Lancaster, Pa.-based bank.

Williams Mullen law firm is providing free legal service on the project.

Twelve units will be sold to lowand middle-income Habitat clients at discounts, starting in the $90,000 range. Three others will be sold at market value, ranging most likely from $175,000 to $190,000.

Buyers of the homes sold at market value will need to obtain their own funding.

However, Habitat is offering $10,000 to be applied to the mortgage, down payment or closing costs to buyers who make 60 percent to 80 percent of area median income. The median income, with half earning less and half more, is $73,200 in Richmond. A family of four could make as much as $58,550 to qualify.

The city inspector is supposed to meet Habitat officials at the site this morning to begin work on the project. “Everyone is rolling,” LaRiviere said.

The development is expected to be completed in July. “We’re looking for thousands of volunteers,” LaRiviere said. The first volunteer workday is March 31.

By Carol Hazard, Timesdispatch

With New York facing insufficient resources to pay for education and health care, the proposed $1 cigarette tax increase will go to the state Health Care Reform Act Resources Fund to support health care and health-related initiatives, such as tobacco control programs. The increase in the cigarette tax is expected to generate additional revenues of $200 million in 2010-2011 and $205 million in 2011-2012.

Tobacco tax increases are good for public health, good for state revenues, and have broad-based public support. The 2008 state Adult Tobacco Survey found 59 percent of New York adults favored the $1 cigarette tax increase. The tax increase would help 53,800 adults to quit and 48,300 state residents to be saved from premature smoking-caused death. In addition, the estimated five-year health savings from fewer smoking-affected pregnancies and births is $16.4 million; and the estimated five-year health savings from fewer smoking-caused heart attacks and strokes is $23.6 million.

Kevin Duffey writes: As the market seems to be in correction mode in recent weeks, I’m starting to become more focused on some positions that I want to accumulate. One of these has been Philip Morris Int’l (PM).
For a potential play, you can now sell a January 2011 put with a $40 strike price for $3.20 premium (as of this writing). Note that you can collect $320 on essentially $4000 in cash (for every put contract) which is an 8% return. It’s actually slightly higher since the time to hold the option is less than a year.

Compare the $3.20 you can collect versus holding shares of the stock. The annual dividend payout on PM is $2.32. So by selling the put versus holding the stock, you can earn an additional $.88 per share between now and January of next year. Even more, you’re essentially obligated to PM shares at $40 per share versus today’s price of around $46 per share, so if you end up owning the shares, your cost basis is based on $40 per share versus today’s price.

I think it’s a great way to collect an 8% return with very low risk. Your only risk is if PM goes well below $40 and you’re required to purchase the shares at $40; obviously, this is still better than buying shares at $46. PM is a great long term holding, consider selling puts to pick up shares at lower prices and earn a higher return in the near term.

Remember, if you do this strategy, be sure you have the cash in your account to purchase the shares if the strike price hits.

If you want to be more aggressive, and you wait for the market to move even lower, you will potentially be able to sell the Jan 2011 $40 Puts for even more income, or target a strike price even lower than $40. Then again, you might not get that opportunity.

Disclosure: I hold shares of Philip Morris Int’l (PM) and am looking to buy more as the market move lower.

By Kevin Duffey, Marketoracle

Pennsylvanians got a raw deal last week when Cigars International showed off its new $10 million distribution center in Bethlehem.

Cigars International, on the other hand, got a great deal.

Last year, state legislators passed a new tax of 25 cents on each pack of cigarettes but killed a proposed cigar tax.

The cigar tax died largely because of the admitted work of Sen. Pat Browne, R-Lehigh, and more than $500,000 of lobbying by the tobacco industry. Of that lobbying money, $32,000 came to Harrisburg from Cigars International.

Today, that $32,000 investment is paying off handsomely in a tax break for Cigars International while costing Pennsylvanians millions in lost tax revenues and increased tobacco-related health care costs.

If the cigar tax had passed, every cigar sold in Pennsylvania would have been subject to an additional $1.60 tax. Because Pennsylvania hosts four of the nation’s eight cigar sellers, that tax would have generated millions of dollars in badly needed revenue for Pennsylvania.

But Sen. Browne and his colleagues apparently think the state doesn’t need that money. Or perhaps the senator and his colleagues are OK with providing a nice return on Cigar International’s $32,000 investment in pushing for no taxes.

So what is Pennsylvania getting in exchange from Cigars International? Cigars International is adding a whopping 50 new jobs to a state with more than a half-million unemployed people.

So instead of tax revenue, Pennsylvania is reinforcing its national reputation as a tax haven for cigar companies that already cost taxpayers millions in tobacco-related health care costs.

Products from tobacco companies like Cigars International cause emphysema, asthma, chronic obstructive pulmonary disorder, cancer and other serious diseases, all of which drive health care expenses up and productivity down. Pennsylvania alone spends $5.1 billion annually on health care costs linked to tobacco-related diseases.

Pennsylvania already taxes cigarettes, and cigars can be even more deadly. Not only are most cigars unfiltered, but a single cigar can contain as much tobacco as an entire pack of cigarettes and take up to two hours to smoke.

Gov. Ed Rendell is scheduled to release his new budget proposal on Tuesday, and he’s expected to include a cigar tax again. This is our chance to start recouping some of the tax dollars Pennsylvania spends on health care and other tobacco-related expenses caused by Cigars International and other cigar merchants.

Call your legislators today. Tell them to quit kowtowing to big tobacco and pass a cigar tax.

And, even if he’s not your legislator, call Sen. Pat Browne too.

Mcall
February 5, 2010

The 12th Habano Festival in Feb 22-26 is one of the most important meetings regarding the marketing of premium-type cigars taking into account the high quality of Cuban cigars.

Main themes of the festival will be the Cohiba and the Romeo and Juliet cigar brands linking the product with women, according to organisers.

As in previous events more than 1,000 people from nearly 50 nations are expected to participate.
The programme includes visits to cigar factories, a trade fair, seminars, tastings, the Habanosommelier contest, a master class in cigar twisting, tours of plantations and a lecture on how to know how old cigar boxes by British Hunter and Frankau CEO, Simon Chase.

A welcoming gala night performance at Havana’s Grand Theater with a concert by six times Latin Grammy laureate pianist Chucho Valdes, will be dedicated to the presentation of new products.

In Canada, a neighborhood corner store, not part of a large chain, that is being used as a front to sell drugs. There will be some legitimate business selling soda, cigarettes, and candy bars, but most of the aisles in the store will be full of liquidation merchandise covered in a thick layer of dust.

As Americans are forced to contend with an economy that is at best “shaky”, a nouveau entrepreneurial spirit is blazing across many parts of the United States. Inspired by an Obama administration that has decided to scale back on federal raids on state ran establishments that legally sell medical marijuana, entrepreneurs who have established legal bodegas have made the purchasing of marijuana on the street corner obsolete. Today, marijuana can now be ordered by phone and delivered to your home in California.

In Germany ordering a beer with your “Quarter Pounder” and fries at McDonalds is not only legal; millions of people living in Germany do it every day. So I ask, “is being able to order Kush with your large extra pepperoni and cheese Domino pizza in Des Moines, Iowa far away”?

The question to ask is “who exactly is in the mix of legally making money from the sale of medical marijuana?” The answer to the question is a variety of entrepreneurs. From selling marijuana growing equipment to running clinics that provide clients with certified doctors who can verify bonafide marijuana patients, to creating “compassion clubs” to selling ski resort packages in Colorado, entrepreneurs are getting paid.

What the State has the potential to gain

The National Organization for the Reform of Marijuana Laws (NORML) estimates that a legal market for marijuana in California could provide the state with as much as between 1.5 billion and 2 billion in additional revenue each year. Analyzing the “getting down to the brass tacks” of it all, implementing a $1.00 per joint excise tax would yield about $1 billion to the state, while the state would save over $150 million in law enforcement costs for arrests, prosecutions and prison. Additional benefits would accrue from sales taxes and spinoff industries. Total retail sales of marijuana would be on the scale of $3-$5 billion, with total economic impact of $8-$13 billion including spinoff industries such as coffeehouses, tourism, and industrial hemp.

Alcohol vs. Marijuana

The most frequently asked question by Americans who advocate the legalization of marijuana is, “why is it legal under the current scope of the law, to consume liquor, beer and cigarettes but illegal to smoke a joint?” Even in an alternate universe ran by Reptilians, the answer to the question is both hypocritical and inaccurate. From Manhattan, Kansas to Cairo, Egypt, medical and safety experts agree that annually, more deaths are caused by the use of tobacco products than any other drug. So…let’s get it straight lawmakers, if a constituent is of legal age to buy a pack of Marlboros, smoke them and then develop illnesses that kill them from the consumption of this product, well…it’s OK. However, depending on what state that you live in, if you buy an ounce of marijuana, a drug that like tobacco, releases certain cerebral endorphins; it’s bad and you may lose your job, your car and your home? Something senator / congress person is not right in OZ.

The truth of the matter is a powerful global tobacco industry pays tens of millions of dollars annually to lobbyist in Washington, D.C. who ensures that legislators will stay “convinced” to continue to allow cigarettes to remain legally sold off of the shelves of Wal-mart and your local bodega. It’s that simple. However understanding our lawmakers’ logic / rationale behind empowering drug lords an opportunity to commit a multitude of crimes through the illegal trafficking of marijuana is more than baffling. Could it be that they have an invested interest in keeping things “as they are?”

As always Louisianans, the New Orleans Examiner.Com is interested in what you think. Is the legal sale of marijuana and hemp a potential economic godsend for our nation? And is it time to hold our state legislators’ feet to the fire for allowing the sale of tobacco and alcohol to remain legal, while simultaneously supporting the prosecution of recreational marijuana smokers? Inquiring minds want to know. Sound off.

Tobacco producing giant Philip Morris International (PMI) broke ground on its new regional tobacco warehouse facility in a 50,000- square meter total land area inside Subic Techno Park that will store tobacco leaf for shipment and processing in various PMI cigarette factories in the Asia-Pacific region.

Philip Morris Philippines Manufacturing Inc. (PMPMI) Managing Director Chris Nelson, Subic Bay Metropolitan Authority (SBMA) Chairman Feliciano G. Salonga and SBMA Administrator Armand Arreza led the groundbreaking Monday morning to signal the commencement of the project.

?Today we break ground in what described to be the largest humid warehouse facility that will established Subic as a major center of regional leaf tobacco trading and a major center for international distribution, ? SBMA Administrator Armand Arreza said.

This new warehouse will have state-of-the-art features such as humidity control, fire suppression equipment, and air conditioning to handle the imported tobacco leaf from China, Indonesia, Thailand, and India, among others, which will be used by PMI cigarette manufacturing facilities in the Philippines, Malaysia and Indonesia..

The expected project completion will be August this year, so definitely, the economic benefit of this project will accrued to the community in a very short period of time,? Arreza said.

What we are groundbreaking today is actually the Phase II of our investment here in Subic.. You will recall that in January 2008, exactly two years ago, we opened the first phase which was a 10,000-square meter leaf warehouse that used to be Building 8120 of SBMA located at the Boton area,? PMPMI Managing Director Chris Nelson said.

At present, the existing refurbished warehouse in Boton Area can only accommodate 6,100 metric tons of tobacco leaf. Phase-I has an initial investment of P30-million while the new project is peg at around P500-million worth of investment, Nelson said.

The new warehouse stands on a 20,000-square meter lot out of the almost 50,000-square meter total land area that we have leased from SBMA for 50 years. In the future, we could further expand the warehouse facility to handle 24,000 metric tons of tobacco depending on the region?s demand,? he added.

The construction of the Subic Techno Park warehouse, with an initial capacity of storing 14,000 metric tons of tobacco, is expected to be completed in July this year.

Nelson disclosed that Subic was chosen from among several possible locations in Southeast Asia ?as it provides reasonable advantages in cost and efficiency over the various storage areas where tobacco leaf are previously kept.?

Through the years, we have steadily expanded our investments here in the Philippines. The project that we are groundbreaking today further cements our commitment to the economic development of the country and our faith in the Philippine tobacco industry,? Nelson said.

PMI is the leading tobacco company in the world with over 15 percent share of the international adult smoking market (excluding China).

It previously invested more than $ 300 million in the construction of its first class cigarette manufacturing facility in Tanauan City, Batangas which became operational in 2003.

PMI?s affiliates, which include PMPMI, manufacture and market seven of the top 15 best selling international brands – including Marlboro, the world?s number one cigarette brand. (PNA)