Discusses H.425, a bill to change Ohio's cigarette tax from per-10 to per-pack. States that PM has succeeded in containing the bill in committee but RJR has fought for its passage. Claims that "unconfirmed reports indicate that the outdoor advertisers association refused to support the bill despite RJR's threat of economic retaliation" and that RJR and B&W contributed a total of $35,000 "to the state Democratic leadership's campaign against the tax-reduction initiatives. . . " Updates current status of bill and suggests actions to counter it: "start a floor fight in the Senate" claiming passage of the bill is a tradeoff for the RJR/B&W contribution, persuade the Senate Democratic Leader to delay passage for one month or do nothing and "remind the State Democratic Leadership that they 'owe us one'. Weighs pros and cons of each approach.
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PHii: P MORRIS U.S.A. INTER-OFFiCE CORRESPOND
120 PARK AVfNUE, NEW YORK. N.Y. 10017
. Scott 1 DATE: 11/17/
FROM:, Jack Nelson
t~9V 17 1983
SUBJECT, 25-Pack Situation in Ohio SjM~lY S. j"'nff
In June Representative Dean Conley (D), Chairman of the House Ways and
Means Committee, introduced a bill (H. 425) to convert Ohio's cigarette.tax
basis from a per-10 to per-stick. We managed to contain the bill in
committee an& prevent it from being attached to an~omnibus budget bill that
passed last summer. During the summer RJR intensified its efforts for a
fall push on H.425 and enlisted the support of the state's farm bureau,
tobacco distributors and newspaper association. Unconfirmed reports
indicate that the outdoor advertisers association refused to support the
bill despite RJR's threats of economic retaliation. Above all, RJR and a
new ally, B'&W', contributed a total of $35,000 to the state Democratic
leadership's campaign against the tax-reduction initiatives on the November
ballot. (PM-USA contributed $10,000 to that campaign.)
On November 15, Conley held a final hearing on H.425. Charles deSeve, an
economist who consults for PM, testified on the negative fiscal and
administrative impact of the bill. Though well-received, the testimony did
not prevent the committee from reporting by a 15-1 vote the tax change to
the House. Yesterday, the full House passed the measure by a 89-3 vote.
The bill now moves to the Senate.
Prospects for Passage
The Senate Democratic lead'ership will bring H.425 to the floor during the
week of November 28. Unless some radical change in the situation occurs,
the bill will pass and be signed by the Governor in early December. It
would take effect on January 1, 1984 and Century would be in~ the retail
outlets by April 1.
We have three options:
1. Instruct our lobbyist, Keith Brooks, to start a floor fight in the
Senate using the argument that the passage of H.425 is a quid pro quo
for the R'JR/B&W campaign contribution.
Comments: This battle would essentially be a: partisan effort by
Republicans to take control of the state senate which the Democrats now,
control by one vote. It would' unquestionably sour our relationship to the
Ohio Democratic leadership and the bill still might pass. It is, however,
the only chance we have to kill the bill or force a: compromise.
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2. Have Mr. Pollack phone Senate Democratic Leader Harry Meschel an& ask
him to delay passage of the bill until January '84.
Comments: Meschel is basing his rush-to-passage in part on a conversation
with Mr. Pollack at the NCSL conference in August. If Mr. Pollack restated
our opposition and asked for a delay, Meschel might relent. However, he
has pledged to pass the bill this year. This option would not do anything
more than d'eLay passage for a month.
3. Do nothing but remind the State Democratic Leadership that they "owe
us one" and accept the loss of Ohio on this issue.
Comments: This alternative would leave our relationship with the
legislative leaders intact and put us in a better position to fight any
anti-tobacco bills including a state-wide sampling ban bill to be
considere& next year. Nonetheless, the loss of Ohio will weaken our
position in the states where RJR has not yet been able to change the law.
cc: B. Robinson