Tobacco Documents Online

CORE OBJECTIVES Minimize impact of Federal, State and Local taxes on the • retail price of our products. Protect the rights of Adult consumers to smoke. Protect PM-USA's ability to market our products.~ Manage external and internal perceptions to benefit our business.~i,.=~ii!..

CIGARETTE SXCISE TAXES Situation Analysis: The Clinton Administration seeks to increase the federal excise tax on cigarettes up to 75¢ per pack to support a national health care program. State cigarette excise taxes have increased at an average annual rate of 8,5%* and states are tying increases to state health care programs on an accelerated basis. Although only 9 states allow local excise taxes on cigarettes, the number of cities and counties taxing, the product is increasing. In 1987, 392 cities and counties taxed cigarettes. By the end of 1993, that number will rise to 439; an average increase of 8 new taxing units per year. 1994 is an election year and therefore we may not face as many battles as this past year. * Slightly lower for an election year, and higher for a non-election year.

::.: ~: ::-.'-..~. Ovel'a]l, most respondents had a greater awareness of the proposed '-;--.tunding sources (i.e., cigarette, gasoline and Income tax) for the ~ :°= ~ National Health: Care Program than about the plan. Most respondents ::.~ .i.~ h~ad little Understanding-of•the core intent of the program and how ....... i ] :,.the. ~rogram Will personally affect them. ..the Federal Government's ability to administer the program. ~.;13i~t~restii~gly, the majority were in favor of national coverage despite their Confusion about the plan and their cynicism about ~:.~ . ~.-Attitudes about funding tend to reflect how consumers feel they will • be personally affected by any increases in tax or copayment sources. That is, most respondents were 'more than happy to "pass the buck" • - to someone elSe or Share theburden provided the tax was not on a:_ -: :~ ; ;product they use on a regular basis (such as gasoline, etc.). " :~-~ spontaneous reactions tO the cigaretteexcise tax tended to be driven ~.:-:,,~+~i by"resl~ondents' personal attitudes about smoking. The non-smokers• i. ~~ ~?_~~sli_o.~!d~par_ry a...greater Share of the financial burden; ' Most Of these ............ individuals feel that smokers add to the cost of healthcare and .......................... ..... therefore should= ........... bear a g~;e ater portio n-0f the .............................. burden.

: ...... ;. T-hei~Ogt ~ser@fia-sive ai, gume-i~t~- aoainst the excise tax on cigarettes ~. ~ ~.- ~iN~.~-.. .......................................................... -- -Job& Income Loss ,.. Bluecollar respondents related to this argument on a personal ~ " level " including theii~selves/family/friends as being directly .......... : .......... !affec.~e_q,:..~y the..tax. White collar respondents were more ........... .~;"- d~t~chi~d-fationalizing the ~;g-ument as persuasive because Of i:~I' ...... :- ~,. : .... it~ negativeimpact on jobs and the economy. ! ~ ~ i: .'-- -'5~ !. 2.: , " " .... " .......... " ......................... ~--: ~" ., that the government Wastes/misspends money. The blue collar of our _ . :~g.r~ip_s..._.w_e_._r.e...p_articuiaHyad&mant about taking care .... nation's problems be~org-/~-~-e~d-ifig m~ney on foreign aid. . ~ ~..,,~,~..--=~.Bad Revenue Source -.; ...... ~ThiS was also brought up independently. Many smokers and .......... " ..... '~ nOn-smokers easily grasped the problem of relying on an ....................... ~--'unreliabie-revenue base~ for a IOng:termprogram and ~.~: ;-i !i ;=.~.. ;; .e.xpressed concern. ,over this issue. .... =~:!-~The. ,s!hgling out One group" argument also received a fairly ..~ i::emot!~l £~sponse. aos,t- smokers and a few non-smokers felt that ' !--i. L~'~"~i~*~fl~;~~i~-r~x~tiOh'i~divisive-'~-a~entiment that ~as nbt ........ .... i positively received. Smokers tended to feel particularly strong about i ..; i! this issue.

SMOKING RESTRICTIONS Situat=onys~s: .. ' : - ~ The Bad News The EPA Report received wide publicity and has caused an acceleration in proposed bans and restrictions. Currently 47 states have some form of smoking restrictions. Smoking is restricted in Private workplaces ih 19 states; 28 states restrict smoking in restaurants. This year alone 18 states and 269 localities passed smoldng restrictions. Measures are still pending in 6 states and 165 localities. Smoking restrictions have been estimated, this year alone, to have decreased PM profits by $40 million. - . Restrictions in shopping malls and arenas have been added to workplace and restaurant restrictions. The Good News More than 9,000 restaurants nationwide participate in the Accommodation Program. Over 250,000 merchandise pieces have been distributed featuring The Accommodation Program Symbol. Thirteen states currently preempt local smoking restrictions. Since 1989, 29 states, the District of Columbia and the city of Boston have enacted legislation which prohibits employment discrimination against smokers.

2044333560 I "03£V1 pue V£N eql#oddn£ • se^!~oe[qo uo!ld~uee~d pue uop, epoLuuJoooe ~Joddns o~ SJaLunsuoo al~^!loe pue suo!l!leOO s£au!snq a~eaJO • elq!ssod Je^eJaqta uo!lelSl6el u! pue elpeuJ eq~ u! eweq~/uo~,eu!w!Jos!p-!;ue eql mowoJd. • ensst eql uo s~eqtue~u e!peLu pue 'sJepeel sseu!snq '~snpu!/q!lel!dsoq eleonp~ • uo!|dLUee~d ~o; lapOLU e se e!u~oJ!leO u! epue6e e^!sueqeJdLuoo e dole^eG 's~olels!.6el pue sJeut~o ssau!snq o; sueq 6u!~lo~us oi uo!~nios eA!leu~elle ue se uJeJ6oJd uo!;epouJuJOOOV eql ep!AOJ~l se!6ele ,S SNOIIOIEI.LS3EI 9NI IOiAIS

THE ACCOM~.~.DATK)N PROGRAM Current Asso~ietion Participants by State (as of 11/12/~) IA COUNTRmS Gt~am ............ .2 ~ ........... 5

Accommo~htion Program Priority for Targeted States I In~ea~ Efforts I Follow-Up I ~Ih Lilt

p • m • ~ • Restaurants: Hotels / Motels: Bowling Cec~ters: 374 Malls: 38 Alrportm: 1 (Rhode Island) PROGRAM TOTAL: 9,013 i

THE ACCOMMODATION PROGRAM How does The Program work? 4 Phase Continuum