Tobacco Documents Online

THE TOBACCO INSI'ITUTE ' 1875 1 STREET. NORTHWEST WASHINGTON, DC 20006 202/457-480G e 800/424-9876 July 15, 1987 MEMORANDUM TO: Executive Committee CEFR: Samuel D. Chilcote, Jr. SAMUEL D. CHILCOTE, JR. President Today the House Ways & Means Committee conducted a final day of hearings on revenue options, while another round of hearings commenced in the Senate Finance Committee. Today's witnes3 lists and selected testimony are attached for your review. Highlights in the House include: o North Carolina Governor Jim Martin, accompanied by Representatives Walter Jones (D-NC), Tim Valentine (D-NC), and Robin Tallon (D-SC), told his former Ways & Means colleagues, "doubling the tax would have a devastating economic effect." Martin said the National Governors Association is very concerned about the potential impact of a federal excise tax increase on state revenues and will consider a resolution opposing such an increase at the association's convention next week. o Rep. Charlie Rose (D-NC), accompanied by Representatives Lindsay Thomas (D-GA), Martin Lancaster (D-NC), and Rep. Robin Tallon (D-SC), implored the committee not to increase the cigarette excise tax. "An increase in the cigarette excise tax will have an adverse effect on the ,conomies of the Southeastern states, already hit with a series of devastating blows," he said. o Rep. Stephen Neal (NC), also testifying for Rep. Jim Chapman (D-TX), said "the entire tax break for low and moderate income families will be eliminated if excise taxes are increased." Neal also referenced his and Chapman's resolution opposing excise taxes. -0 ~ ~ ~ N GJ ~

Executive Committee July 15, 1987 Page 2 o Rep. Mervyn Dymally (D-CA), representing the Congressional Black Caucus, told the committee, "Congress is looking to take back what it gave to the poor in 1986." Dymally added, "the regressive nature of excise taxes has been well documented." Dymally referenced the preliminary draft of a major report on revenue options prepared for the Congressional Black Caucus. The report will be released next week. Dymally also testified before the Senate Finance Committee. a Rep. Tallon submitted for the record a letter from South Carolina Governor Carrol Campbell, urging the committee not to consider any excise tax increase on tobacco products. o The following tobacco family representatives also were present throughout today's hearing: Dan Daniel (D-VA), David Price (D-NC), Howard Coble (R-NC), and Chris Perkins (D-KY). Highlights in the Senate include: o Sen. Jesse Helms (R-NC), appearing on behalf of 200,000 North Carolina tobacco growers said an increase in the cigarette excise tax is the "worst way possible" for Congress to reduce the deficit. Helms suggested reduced federal spending as an alternative to excise taxes. o Sen. Mitch McConnell (R-KY) testified that excise taxes would completely negate last year's income tax reduction for the poor. He said, "increased taxes will bring in less revenue, not more." McConnell submitted the Peat Marwick study for the record. o Sen. Terry Sanford (D-NC), supporting the testimony of Helms and McConnell, said, "an excise tax will place an unnecessary burden on tobacco farmers and taxpayers." o Sen. Wendell Ford (D-KY) submitted a written statement for the record opposing increased cigarette excise taxes. o Dennis E. Ross, Department of the Treasury, reiterated President Reagan's opposition to any tax increase. In response to a query from Sen. Max Baucus (D-MT) on which taxes were less objectionable, Ross refused to insinuate any taxes are more attractive than others.

Executive Committee July 15, 1987 Page 3 Also today, with Labor Management Committee support, the attached ad opposing excise taxes appeared in the Washin~_t..o.n.. Post. The ad was sponsored by 14 major labor unions. The ad wilI appear in several labor/liberal publications over the next few weeks. On Thursday, July 16, former Congressman Charles Whitley will present The Tobacco Institute's testimony before the Senate Finance Committee. Over the past week, the Senate has been debating trade legislation. Late Tuesday evening, amendments were offered on the floor by Senators Alan Cranston (D-CA), Majority Leader Robert Byrd (D-WV) and Bill Bradley (D-NJ) to increase the excise tax on tobacco products to finance various programs in the pending trade legislation. All three amendments were defeated with a motion to table. These amendments were less a serious effort to increase the tax than part of parliamentary maneuvering to influence debate on the trade bill. Byrd, for example, voted to table all three amendments, including his own. We will continue to report as this process continues. SDC:ip Attachments cc: TI Senior Staff

R EC EI't ED :'. 161987 '~-I;STEVENS