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fTATION WABC-TV & THE ABC TV NETWORK THIS WEEK W/DAVID BRINKLEYEIn NEW YORK 02/28/93 11:30 A.M.AUOaNC! TAX ON CIGARETTES BROADCAST €168F` SAM DONALDSON (PANELIST): The President appeared to have pulled a new tax out of hi. pocket this past week down the road to help pay for the new medical program, cigarette taxes, and it's being widely said perhaps up to $2.00 a pack. Is that what you're - considering? LEON PANETTA .(OMB): Obviously; you don't know what we're going to do with regardr to a health care reform package until it's done, until we see the actual health care reform proposal itself. I think the President did suggest that cigarettes are something that may be considered. why? - Because cigarettes relate to health problems in this country. DONALDSON: Would you be for $2.00 a pack? PANET-TA: I th_ink_ it's legitimate to look at a cigarett:: tax as part of the way to pay for health care reform because it's not only paying for it, but more importantly, it may try to inhibit the very kind of behavior that produces health care pr_oblems in this country. DONALDSON: Senator Harkin and Senator Bradley, among others, - - - have a proposal which I understand will be made again this_ year. That is for cigarette companies to redu_ce the advertising amount that they can deduct from 100% d_own_to 80f or even lower. Would you be for that? PANETTA: I think that's something that ought to be discussed and I think it's the kind of proposal that we're willing to work with the Congress in putting for.+ard." GEORGE WILL (PANELIST) : About the cigarette tax, what are you assuming about the elasticity of demand for cigarettes if you put a $2.00 tax on them? The ideal social policy aim of the tax would be to get iero revenue because you want everyone to quit smoking. Are you assuming that people will continue to smoke pretty much as usual to generate 35 billion or whatever they're expecting from this? PANETTA: No. I think obviously the purpose of that kind of tax on cigarettes is not just for the purpose of raising revenues, but also to try to get people to reduce their use of cigarettes so that we don't continue to have health care problems resulting from - cigarette smoking. DAVID BRINKLEY (HOST): What would happen if they put a $2.00 tax on cigarettes, George? WILL: Well, clearly that's a product for which, and we know this from Canada, where I think they now have a 53.70 tax on a pack, it'. a product the demand for which, like for most products. - - is price elastic. Fewer people would smoke. Some would still _ continue to because it's a terrible, terrible addiction accounting for the premature deaths in 1988, the year for which we have the most recent numbers, 434.000 Americans. So as a revenue measure. it may be the gusher that they anticipate, but a social policy -- BRINKLEY: Are you sure of that? Sam, you've been an anti- cigarette campaigner for some time. DONALDSON: I have. Well, you mentioned the Centers for Disease Control figure. 434,000 Americans died from a smoking- related disease in 1968, the latest year for which we have figures. But the cigarette companies say they don't know whether a single American has died. We talked to the Director of Smoking and Health, put him on the air, from R.J. Reynolds. He said, •I don't know what the figure is.' And I said, 'Are you suggesting it's zero?" He said,- 'I don't know." because the tobacco companies carry on this fiction that there still is more research needed. •We're not quite certain. Maybe it does. Maybe it doesn't. It is one risk factor." That's nonsense. If you smoke. you're killing yourself and the children around you who get the sidestream smoke. COKIE ROBERTS (PANELIST): So the number could be higher - - - because of passive smoke and all that. DONALDSON: Yes. ROBERTS: I think one of the main effecta of actually putting a great, big tax on them would be that many fewer young people would smoke- because they couldn't afford it. It's just that simple. when you go to college and you go out to buy cigarettes because you think it's cool or because a young woman thinks that she'll be thinner or whatever it is, they'll just can't afford to lCent'/.I 11.