Secretary of State Robin Carnahan has approved for circulation an initiative petition to increase the tax on cigarettes by 73 cents per pack. Organizers — including University of Missouri System Curator Warren Erdman — now will need to collect roughly 100,000 signatures from registered voters to get the language on the November ballot. If approved, the hike would increase taxes on a pack of smokes from 17 cents — the lowest cigarette tax in the nation — to 90 cents a pack. The national average is $1.46.

The tax could generate between $283 million and $423 million more a year, and the money would be allocated for tobacco prevention and for K-12 and higher education.

Though Gov. Bobby Jindal vetoed the concept, and the House failed in its attempt at an override, the effort to renew a 4-cent tax on cigarettes was revived Monday. In a surprise move, House members approved an amendment to a bill that originally redirected money from the state’s tobacco settlement to the TOPS college-scholarship program. But Sen. John Alario, R-Westwego, sponsor of Senate Bill 52, is expected to ask his colleagues to remove the amendment when it’s presented to the Senate today.

The tax rider immediately sent Rep. Gordon Dove, R-Houma, who has opposed the tax since it was introduced, to his feet.

Dove has been a defender of Jindal’s administration during this ongoing debate.

“We already heard this bill,” Dove said. “This was already defeated, and now it’s being slipped in.”

Dove went on to call it a “smart move” on the part of Rep. Harold Ritchie, D-Bogalusa, author of the original cigarette tax.

“This also puts the TOPS bill in jeopardy,” he added.

The House approved the amendment by a 62-39 vote, with Dove casting the lone vote against it from the Houma-Thibodaux delegation.

Voting in favor were Reps. Damon Baldone, D-Houma; Truck Gisclair, D-Larose; Joe Harrison, R-Napoleonville; and Dee Richard, no party, of Thibodaux.

The tax would generate $12 million annually for various health-care needs, said Ritchie.

He told the House that his amendment differed from his original bill, which asked lawmakers to renew the 4-cent tax before it expires next year.

“The amendment just deletes the expiration date on the tax,” Ritchie said.

Buy cheap cigarettes without taxes, using tax free mail delivery.

South Carolina once boasted the lowest cigarette excise tax in the U.S., but that distinction now goes to Missouri. A pack of cigarettes in the Show Me State costs about $5.14 a pack — a strong contrast to about $13 a pack in say, New York City. Perhaps you can call Missouri the last state standing. Efforts to raise the cigarette tax have been repeatedly shut down at the polls and in the Legislature. And at 17 cents per pack, Missouri “remains determined to keep its cigarette taxes (and beer taxes too) at permanently low levels,” reports Time magazine.

Missouri state Rep. Mary Still isn’t giving up; she’s drafting a bill to increase the state’s cigarette excise tax by 12 cents each year for eight years. However, she’s got her work cut out for her: Gov. Jay Nixon, a Democrat, is maintaining a no-new-taxes pledge.

And according to the state’s constitution, any major tax increase has to go before voters. “In 2006, a proposal to raise the cigarette tax to 97 cents a pack lost a hard-fought referendum, 51% to 49%. Hospitals and health advocates poured millions into the campaign for the tax; opposition came from the tobacco lobby, gas stations and convenience stores. Posters at minimarts and filling stations across the state called for voters to ‘Stop Tax Abuse’ and vote down a ‘470%’ tax increase,” writes Time.

The magazine continues that opponents of the tax increase maintain higher taxes on tobacco are regressive and hit the lower-class residents the hardest. Also, Missouri’s low taxes benefit the state because of cross-border sales coming from eight neighboring states.

“The anti-tobacco zealots are not trying to reasonably regulate,” Ron Leone, executive director of the Missouri Petroleum Marketers & Convenience Store Association, told Time. “Their goal is prohibition. It’s hard to negotiate with these people. They can’t prohibit it, so they’re trying to kill it by a thousand cuts.”

Leone explains that the federal cigarette tax is $1.01 per pack, and combined with state and local taxes, Missouri smokers pay 46% in taxes on a pack of popular budget brands, while brand names are taxed at more than 30%. “There is no other product on the market that’s overtaxed like that,” said Leone.

California tax officials have a new weapon in the war against cigarette bootleggers. On Tuesday, the California Board of Equalization unveiled its latest high-tech tax stamp. The device, which will appear on legally authorized cigarette packs beginning Jan. 1, uses special inks that shift colors from yellow-gold to green. Each stamp also includes a unique serial number and more encrypted information than the last version of the tax stamp, released in 2005.

The encrypted information, which can be scanned by inspectors, shows whether a stamp is legitimate and how the product moved from factory to distributor.

Cigarette tax evasion costs California $182 million a year. That figure, though significant, has been reduced by $133 million in recent years, thanks to improvements in stamp technology and tightening of licensing and enforcement laws, said Anita Gore, a board spokeswoman.

“What we have found with the high-tech encrypted stamp is that it can’t be copied,” Gore said. “Now with the color-shifting-ink component, even the image will be more difficult to copy. Making the stamp more difficult to counterfeit stops the sale of illegal cigarettes by those who would try to undercut the legitimate sale of cigarettes by mom-and-pop retailers and others who are just trying to follow the rules and make a living.”

California’s cigarette tax is 87 cents per pack, a higher rate than in other Western states. The state tax in Nevada is 80 cents, in Wyoming 60 cents and Idaho 57 cents per pack. The average tax in states that grow tobacco is 48.5 cents.

A $1.01 federal excise tax also is collected on each legal cigarette pack.

Raising the surcharge on cigarettes to generate revenue for the financially ailing national health insurance (NHI) system, as some have proposed, could only be done if the law were revised, a Department of Health (DOH) official said. An amendment to the Tobacco Hazard Prevention Act (菸害防制法) would have to be proposed and passed if the government wanted to increase the tobacco health and welfare surcharge, Bureau of Health Promotion Director -General Chiou Shu-ti (邱淑媞) said. The department doubled the tobacco health surcharge to NT$20 per pack of cigarettes last year by the same process she said.

Chiou was responding to a suggestion made earlier in the day by Vice Premier Sean Chen, who said that increasing the tobacco surcharge would be the best way to bridge the health -insurance system’s deficit if expanding -premium revenues did not fully cover it.

Although the law stipulates that the surcharge can be reviewed every two years and allows it to be raised further, Chiou said she believed another hike would still not be enough to free the health insurance system from its financial woes.

Raising the surcharge again would not necessarily mean that the NHI’s revenue would continue to grow, Chiou said, because the higher prices charged for cigarettes could just as easily reduce the smoking population and therefore the revenue base.

According to the department the Bureau of National Health Insurance had an accumulated deficit of about NT$53.3 billion (US$1.7 billion) as of the end of August.

Most of the compulsory system’s revenue comes from insurance premiums, but it has also drawn funds from the tobacco surcharge, which raises NT$36 billion a year after the surcharge hike took effect in June last year, nearly double the NT$20 billion a year it raised previously.

The NHI system received 70 percent of the revenue, or about NT$25 billion, this year to help fund its operations.

Japan’s consumer prices fell for a 20th month in October, with declines moderating after the government raised tobacco taxes. Consumer prices excluding fresh food fell 0.6 percent from a year earlier after dropping 1.1 percent in September, the statistics bureau said today in Tokyo. The government’s Oct. 1 tax increase, which boosted the cost of cigarettes by a third, added 0.28 percentage point to the figure, the bureau said.

Entrenched deflation is weighing on an economy at risk of contracting this quarter after a climb in the yen to a 15-year high undermined export growth. The currency’s 11 percent advance against the dollar this year has also exacerbated price declines by lowering import costs, adding to the case for the Bank of Japan to provide more monetary stimulus.

“Deflationary pressures have been easing slightly but it’s unclear whether that trend is sustainable,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. “The economy will probably shrink this quarter and the strong yen is also going to start pushing down prices.”

October’s price drop matched the median forecast of 28 economists surveyed by Bloomberg News. An increase in insurance fees also pushed the index up by 0.15 percentage point, the bureau said.

The yield on the benchmark 10-year government bond rose two basis points to 1.175 percent at the morning close in Tokyo, the highest since Sept. 7.

Persistent Pressure

“There’s still a huge amount of slack in the economy, which is persistently exercising downward pressure on prices,” even though the drops have eased, Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo, said before the report. “It’s hard to predict when prices will turn positive,” he said, predicting that gross domestic product will shrink this quarter.

Pressure for the BOJ to do more to fight deflation has grown, with both ruling and opposition lawmakers calling for legislation that would give politicians more control over monetary policy.

A group of lawmakers from the ruling Democratic Party of Japan said this week the bank should adopt an inflation target to eradicate price declines and help bolster employment. The members also want to revise a law that guarantees the central bank’s independence. Your Party, an opposition group, last week submitted a bill to the parliament, calling for a revision that would incorporate a target.

Political Pressure

“Although the chance for an actual revision of the law is slim, politicians’ actions of debating the issue alone would have some influence on monetary policy,” said Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

BOJ policy makers last month forecast core prices, which exclude fresh food, will start to rise in the year starting April 2011. The bank last month pledged to maintain ”virtually zero” interest rates until an outlook emerges for sustained price increases. Board members say they consider inflation stable in a positive range of up to 2 percent, with their median estimate at 1 percent.

Falling prices undermine an economy by eroding corporate earnings, putting pressure on wages, and making debts harder to pay off. Deflation has afflicted Japan for more than a decade, contributing to its being surpassed by China in the second quarter as the world’s second-largest economy, after the U.S.

A separate government report today showed Japan’s land values fell at 87 of 150 prime locations throughout the country, or 58 percent of monitored sites, compared with 70 percent three months earlier.

Yen’s Advance

Some board members said falling prices may damp long-term inflation expectations of companies and households, minutes of the bank’s Oct. 28 meeting showed this month. The yen’s advance lowers prices by making imports cheaper and that dynamic ”warrants caution,” Seiji Nakamura, a BOJ board member, said in a speech yesterday.

Seiyu Ltd., a supermarket operator owned by U.S.-based Wal- Mart Stores Inc., this week began discounting 3,200 items including food, clothing and household goods by as much as 60 percent. Daiei Inc., another supermarket operator, is also cutting prices of household goods by as much as 25 percent.

A revision of the base year to calculate consumer prices scheduled for August 2011 will also likely lower Japanese price data. The last government revision pushed down prices by about 0.5 percentage point.

”Consumer price data will probably be depressed by the next year’s revision more than last time,” BNP Paribas economists Ryutaro Kono and Azusa Kato wrote in a report. ”The BOJ’s exit from its virtual zero-rate policy seems considerably far away.”

Raising Virginia’s cigarette tax by $1 per pack would bring in $317.7 million in new annual revenue to help close the state’s budget shortfall, according to the Campaign for Tobacco-Free Kids and other health groups.

Increasing the tax in Virginia also would prevent 65,100 children from becoming smokers; spur 34,100 current adult smokers to quit; save 29,800 residents from premature, smoking-caused deaths; and save $1.4 billion in health care costs, the report said.

Virginia’s cigarette tax is 30 cents per pack, which ranks 49th in the nation. The national average is $1.34 per pack.

Nationally, increasing cigarette taxes by $1 a pack would raise $9.1 billion in revenue annually.

Tobacco makers oppose higher taxes after a 62-cent-a-pack increase in U.S. taxes last year hurt demand for cigarettes made by Altria Group Inc., the largest producer, Reynolds American Inc. and Lorillard Inc.

“Cigarettes are already extremely heavily taxed” and taxes “inflict long-term pain on all taxpayers, not just smokers,” said Bill Phelps, a spokesman for Henrico County-based Altria.
Web site holding job seekers’ contest

In celebration of its one-year anniversary, RichmondJobNet.com is running a contest for job seekers to win personal career counseling valued at more than $1,500.

Run by the Greater Richmond Partnership, the Web site for job seekers, employers and entrepreneurs now also includes career-focused blogs, a career assessment tool and a job search function. The site also offers RichmondJobNet Radio, a collection of interviews with authors and experts available as podcasts.

To be eligible for the contest, you must be at least 18, actively seeking employment and live in Richmond or the counties of Chesterfield, Hanover and Henrico. An explanation, in 150 words or less, of what you need the makeover is required. The contest runs through Feb. 26.
THE NATION
Citigroup launches new foreclosure plan

Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property.

Citi is launching the pilot program, dubbed “Foreclosure Alternatives,” this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. It may expand the program nationwide.

In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi’s program, like other “deed in lieu of foreclosure” efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower’s credit score.
Google Inc. to build Internet networks

Google Inc. plans to build a handful of experimental, ultra-fast Internet networks around the country to ensure that tomorrow’s systems can keep up with online video and other advanced applications that the search company will want to deliver.

The Google project, announced yesterday, also is intended to provide a platform for outside developers to create and try out applications that will require far more bandwidth than today’s networks offer.

The company said its fiber-optic broadband networks will deliver speeds of 1 gigabit per second to as many as 500,000 Americans. The systems will be many times faster than the existing DSL, cable and fiber-optic networks that connect most U.S. consumers to the Internet today at speeds typically ranging from 3 megabits to 20 megabits per second.

By Staff Reports, Timesdispatch

RALEIGH, N.C. — For years, buying low-tax North Carolina cigarettes and selling them on the black market in a high-tax state up north has been an easy way to make big money for criminal enterprises.

Load up a van of Camels or Marlboros and reap a $100,000 profit to sell them if the destination is New York City, which has a $1.50-per-pack excise tax in addition to the $2.75 state cigarette tax.

“The cigarette tax evasion stampede is out of control,” said Jim Calvin, president of the New York Association of Convenience Stores. More than half of cigarettes purchased in his state are bought without paying state or local taxes, largely because of out-of-state smuggling and Internet sales.

Catching people with North Carolina contraband is difficult because it’s one of three states that don’t require tax stamps affixed on every pack being sold.

Interest in restoring the stamps after a 16-year hiatus has been revived as a way to deter smuggling from North Carolina – and in an ironic change – into North Carolina. The state now may be the target for cheaper cigarettes from South Carolina, which has a 7-cent-per pack tax and doesn’t use stamps. North Carolina’s 45-cent tax has grown nine fold since 2005, creating a cross-border difference of $3.80 per carton.

“We’ve only been at a tax disadvantage since the tax went up in the past couple of years,” said Gary Harris with the North Carolina Petroleum and Convenience Marketers Association.

Stamps provide evidence the wholesaler has paid the state tax before packs are shipped to retailers. Black-market vendors have a harder time selling stamped packs because they can’t easily hide their origin or must try to replace the stamp with a counterfeit from another state. North Dakota is the only other state without stamps.

In 2002, a federal jury in Charlotte convicted two Lebanese citizens of diverting millions of dollars in cigarette smuggling proceeds to the radical Islamic group Hezbollah by shipping North Carolina cigarettes to Michigan for resale. Another grand jury indicted nine people in November for a smuggling operation that prosecutors alleged reaped at least a $5 million profit.

“Criminal organizations all over the country exploit variants in state excise taxes and tax stamping laws to generate millions and millions of dollars in illicit profits,” said Sandy Sands, a lobbyist representing Philip Morris USA, which wants the stamps restored. “We’re not talking about the people that come down and vacation at the beach and take eight or 10 cartons home with them to Ohio and Pennsylvania.”

Lawmakers studying the issue over the past month in a revenue law committee sound interested in restoring the stamps first used in North Carolina in 1969, when lawmakers approved its first 2-cent tax on cigarettes.

The General Assembly eliminated the stamps in 1994 because the 3 cents per carton tax wholesalers got to keep for administrative expenses was hardly enough to defray the costs of sticking them, said Sands, a state senator at the time of the repeal.

Today, wholesalers receive a 2 percent discount – about 9 cents per carton – to help with filing monthly revenue reports to the state. But they’re concerned that won’t be enough if they’re required to stamp again.

Stamping machines can cost $80,000 each, said Sonny Wooten, president of Southco Distributing Co. in Goldsboro, and additional employees may have to be hired. Large retailers who act as their own wholesalers don’t want their costs raised during a recession.

Wooten said a 4 percent discount may be enough. Otherwise, the extra cost is eventually passed on to consumers, said Andy Ellen with the North Carolina Retail Merchants Association.

Doubling the discount could take away several million dollars away from the state’s coffers, months after the General Assembly raised the cigarette tax by 10 cents a pack.

Add word from legislative researchers that the state actually would lose another $5.4 million in annual tax revenues with stamps at the current 2 percent discount – and spend $1.2 million every year to run the program – and some lawmakers are sure to have second thoughts during tight budget times.

The analysis found the stamp requirement would discourage cigarette smuggling out of North Carolina, estimated at 18 million packs this year.

While lawmakers want more information about the bill before the session reconvenes in May, many suggested curbing smuggling was the priority.

“I’m beginning to look more favorably at the bill,” said Rep. Bill McGee, R-Forsyth, a former R.J. Reynolds Tobacco Co. employee. “It doesn’t raise taxes, it only helps us to collect the taxes that were due us and it would prevent some of this other untoward activity.”

An Oregon Senate committee tomorrow will hear public testimony on a bill that would give local governments authority to tax tobacco and cigarettes.

Multnomah County officials are seeking that authority to raise money for county health and human services, discourage teenagers from smoking and reduce smoking-related health costs, said Deborah Kafoury, member of the Multnomah County Board of Commissioners.

The House narrowly passed a similar bill in the last session, but the Legislature adjourned before the bill reached the Senate floor.

The proposal, Senate Bill 1042, would lift a ban against local governments taxing cigarettes and tobacco. If the 2010 Legislature passes it, Multnomah County will begin having public hearings on a county tobacco tax, Kafoury said. County leaders want to settle on a tax that is high enough to have impact without being so high it sends smokers across county lines in search of cheaper cigarettes, she said.

One figure that’s come up has been a tax of 25 cents per pack of cigarettes, which would raise between $7 million and $9 million a year, she said. Commissioners are confident Multnomah County residents would support the tax, Kafoury said, because they voted in favor of a 2007 measure to increase the state’s cigarette tax by 85 cents a pack to pay for children’s health insurance.

That initiative, Measure 50, failed statewide by a 3-to-2 vote after cigarette companies spent $12 million on a campaign to defeat it. They will try to defeat efforts by Multnomah County to tax tobacco, too, Kafoury predicted.

“The only opposition to this bill is the tobacco companies,” said Kafoury, who plans to testify at the 1 p.m. hearing Friday before the Senate Finance and Revenue Committee.

By Bill Graves, The Oregonian
February 04, 2010