Tobacco Documents Online

P THE TOBACCO INSTITUTE ISiS 1 STREET. NORTHWEST SAMUEL D. CHILCOTE, JR. bV;1SIIfNGTCJN.,DC 200U(i' Presiiient'2{)Y.-35v.--FfSl91) • H0W42-1-91i>ti July 2, 1987 MEMORANDUM TO: Executive Committee FR: Samuel D. Chilcote, Jr. Representative Dan Rostenkowski (D-IL), chairman of the House Committee on Ways & Means, has announced public hearings on options to increase revenues mandated by the FY 1988 Budget Resolution. The hearings are scheduled to run from Tuesday, July 7, through Thursday, July 9. We have been informed that Members of Congress will testify during a half day session on July 15. - Last week, Joint Committee on Taxation and Ways & Means Committee staff released their report detailing over 100 possible revenue options'-- including options to increase the cigarette excise tax and to limit advertising expense deductibility. While the Chairman has not yet finalized the format of the hearings, we have learned the following preliminary information. Witnesses scheduled for July 7 include: the U.S. Chamber of Commerce, AFL-CIO, Citizens for Tax Justice, and the American Civil Liberties Union. On July 8, the American Farm Bureau and other agricultural as,sociations will testify. On July 9, The Institute will appear on a panel with Coalition on Smoking or Health, National Association of Tobacco Distributors, the Flue- Cured Stabilization Corporation and Council for Burley Tobacco. The Coalition Against Regressive Taxation (CART) also will testify on July 9. The Chairman has stated that witnesses who oppose specific revenue raising items should propose alternatives for the Committee's consid'eration. As discussed~in my memorandum of June 26, The Institute is well prepared for these hearings. In addition to our own efforts, we are working through conservative and liberal coalitions to oppose all excises. By sticking to this broad-based approach, we have given the Members a good deal to worry about.

r 4k Executive Committee July 2, 1987 Page 2 Former Congressman Charlie Whitley will present The Institute's statement. The Institute's testimony (draft attached) responds to the arguments presented in the Joint Taxation/Ways & Means report justifying an increase in the cigarette excise tax. North Carolina Governor Jim Martin, a former member of Ways & Means, is scheduled to testify along with Members of Congress on July 15. South Carolina Governor Carroll Campbell and Virginia Governor Jerry Baliles are expected to submit written statements to the Committee. Thomas Donohue, president of the American Trucking Association, requested to testify on behalf of the members of the Coalition Against Regressive Taxation (CART). His draft statement is attached. We are working with CART to expand the focus of the testimony. Although the number of witnesses will be limited, 20 individuals and organizations have requested time to speak in support of our excise position'and those denied an opportunity to speak will submit statements for the record. These include: Congressmen Rose (D-NC), who will be accompanied by several of the 42 House "tobacco family" members, Chapman (D-TX), Neal (D-NC), and Dymally (D-CA), representing the Congressional Black Caucus; the U.S. Chamber of Commerce; the AFL-CIO; Citizens for Tax Justice; League of United Latin American Citizens (LULAC); Labor Council for Latin American Advancement; the National Conference of State Legislatures; and, the National Governors' Association. Most have requested and are receiving our assistance in preparing statements for the record. Also requesting an opportunity to testify are the American Farm Bureau Federation, the North Carolina Tobacco Growers, National Tobacco Council, Flue-Cured Tobacco Stabilization Corporation, Council for Burley Tobacco, Burley Auction Warehouse Association and the American Agricultural Movement. Another 22 organizations and individuals will submit supportive statements for the record. These include: the five unions of the Tobacco Industry Labor Management Committee; Service Employees International Union; International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers; Association

r Executive Committee July 2, 1987 Page 3 of Flight Attendants; Retail, Wholesale and Department Store Union; International Union of Operating Engineers; United Paper Workers International Union; and, Distillery, Wine and Allied Workers International Union. At the urging of our labor allies, the League of Women Voters also will submit a statement opposing excises. The Reverend Leon Sullivan's Opportunities Industrialization Centers of America, the National Conference of Black Mayors, the U.S. Hispanic Chamber of Commerce, the Texas Association of Mexican-American Chambers of Commerce, the Hispanic Federation of Illinois Chambers of Commerce and several charitable organizations concerned with tax fairness have agreed to submit statements for the record. Additionally, of the four revenue raising options included' in the Joint Taxation/Ways & Means report which limit the deductibility of advertising costs, two are generic to all advertisers, requiring"that all or a specific percentage of advertising costs be amortized over time, rather than as currently deducted. The other two are industry specific, denying any advertising and promotion deductions for tobacco and/or alcohol products. We have urged advertising and media trade associations to testify in opposition to all four options. Recognizing that these trade groups may emphasize their opposition to the generic advertising revenue raisers, we have enlisted the help of Barry Lynn, legislative counsel of the American Civil Liberties Union. He has requested to testify on the unconstitutionality of proposals to disallow tax deductions for tobacco product advertising expenses. In support of the hearings and the Committee's subsequent deliberations: o We have targeted ten Democratic Ways & Means Committee members and have encouraged lobbyists representing labor, minority and farm interests, to meet with them on the excise tax issue. LULAC president Oscar Moran is coming to Washington to participate in this effort. o We are drafting questions to help Committee members emphasize key points.

! Executive Committee July 2, 1987 Page 4 o The hearings will receive heavy media coverage. Institute staff and public relations counsel will be on hand to provide background information and to steer journalists to anti-excise witnesses. o An analytical piece on the hearings will be written by economist Robert Tollison and distributed to major news outlets the following week. Another round of op-ed articles is being drafted by our consultant economists and should begin appearing in major newspapers in 10 targeted districts shortly after the hearings. o Staff is monitoring requests to testify by excise tax proponents. Witnesses' testimony and statements will be adjusted to address the points they might make. o A TAN mailing has been sent to more than 1,000 key activists who reside in Ways & Means member districts. Field staff has been advised and asked to generate letters'not only from TAN activists, but also from other allies. Our on-going Ways & Means contact program continues to generate correspondence and meetings between our field staff, counsel and allies. o We are encouraging our member company CEO's to meet with House leadership and to show appreciation to members who have been supportive on the excise tax issue. We entered this year surrounded by experts who predicted the federal cigarette excise tax would double by mid-year. We enter these hearings in solid shape but we remain mindful that in the absence of broad and vocal opposition, excises are a legislator's easiest revenue alternative. Be assured we will report promptly as this process moves forward. SDC:ip Enclosures cc: TI Senior staff

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