Tobacco Bill Faces Test in Critical Senate Committee

The giant tobacco-control bill goes today to the Senate Finance Committee, which has sharply criticized central portions of the bill and suggested that it might add tax cuts and additional spending programs to the measure--which is already expected to cost $516 billion over the next 25 years.

At the same time the Joint Tax Committee, Congress’ official arbiter of tax policy, is expected to release estimates showing that the tobacco bill would raise the price of a pack of cigarettes over five years perhaps as much as $1.80 per pack instead of the previously estimated $1.10, according to key Senate staff members.

There is no telling what effect the Joint Tax Committee estimates might have on Finance Committee members. “There could be some sticker shock,” said a Republican staffer.

And if the Finance Committee insists on the array of additional spending programs and tax cuts that were under discussion this week, the price tag for the legislation could go higher, a situation that could increase opposition when the bill reaches the Senate floor.

Already, Sen. Don Nickles of Oklahoma, who ranks second in the Senate Republican leadership, is considering whether to split with Majority Leader Trent Lott of Mississippi and lead a drive to delay a floor vote on the bill, now slated for the end of next week.

“We don’t want a limit on amendments,” said Nickles. “I don’t know that this bill can be fixed by amendments but we may have to try to do that for a while. . . . This bill goes too far--it’s going to be hard to finish by the end of next week,” he said.

Behind closed doors this week, Finance Committee members reached a tentative agreement in three key areas: to convert the per-pack price increase into a sales tax; to create a fund to spend the money raised by the tax; and to eliminate or sharply modify the bill’s international trade provisions, which would put an export tax on cigarettes that U.S. companies or their partners and subsidiaries sell overseas. It would also deal with the distribution and the use of the states’ share of the revenue from the tobacco tax.

“It’s a debate between $1.10 and $1.50,” said Sen. John B. Breaux (D-La.) of how much the excise tax would have to be to fund the programs the committee wants to pay for.

Among the spending options discussed by Finance Committee members were health-related tax cuts and programs.

The list included: a tax deduction for workers who buy health insurance for themselves; accelerating the phase-in of a 100% tax deduction for health insurance for the self-employed; reimbursing states for the Medicaid costs of caring for people with tobacco-related diseases; efforts to prevent children from starting to smoke as well as smoking cessation programs; research programs at the National Institutes of Health on smoking-related diseases; and claims payments to asbestos workers who have lung disease.

The tobacco legislation the Finance Committee will take up is a bill the Senate Commerce Committee approved, 19 to 1, in late March. It would require cigarette manufacturers to make annual payments to the government, which the companies would in turn pass on to consumers in the form of an increase in the price of a pack of cigarettes.

However, it has always been unclear just how much the per-pack price would rise.