Latest Tobacco Buyout Proposal is a Sweetheart Deal for Tobacco Companies And a Raw Deal for Public Health, Taxpayers and Tobacco Growers

Statement of William V. Corr Executive Director, Campaign for Tobacco-Free Kids

Jun. 4 2004

Washington, DC — The tobacco buyout proposal included in corporate tax legislation introduced in the U.S. House of Representatives today (the FSC/ETI bill) is a sweetheart deal for tobacco companies and a raw deal for public health, taxpayers and tobacco growers. It does nothing to protect public health and reduce the devastating toll from tobacco use in our country. It sticks taxpayers with the nearly $10 billion bill for the buyout instead of tobacco companies and actually raids money that has funded the Children’s Health Insurance Program. It gives tobacco growers much less than they would receive under other buyout proposals, leaves them with no economic safety net and would in the long run wipe out family farms.

Although this proposal is presented as benefiting tobacco growers, it really benefits tobacco companies at the expense of taxpayers and growers. This proposal benefits the tobacco companies’ bottom line in two ways. First, unlike other buyout proposals, this proposal would not require the tobacco companies to pay for the buyout and would instead leave taxpayers footing the bill. By funding the buyout with five cents of the existing federal cigarette tax, this proposal either amounts to deficit spending or a diversion of funds from the Children’s Health Insurance Program, which is funded in part with the existing cigarette tax. Either way, taxpayers are stuck with the bill. Second, because this proposal eliminates all tobacco price and production controls, the tobacco companies will benefit from cheaper tobacco. Reducing the price of tobacco products in turn will make them more appealing to our children.

In contrast, tobacco growers would receive far less than they would under other buyout proposals. The elimination of all price and production controls would leave them with no economic safety net in the future and eventually wipe out family farms.

This proposal is also deliberately crafted to avoid taking any action to protect public health and reduce tobacco’s tremendous toll in health, lives and money. It is mind-boggling that Congress would put the interests of the tobacco companies ahead of public health just weeks after the Surgeon General of the United States reported that smoking is even more harmful than previously thought.

There is a better way to both protect public health and help tobacco growers. Identical, bipartisan legislation is pending in both houses of Congress to grant the U.S. Food and Drug Administration effective authority over tobacco products, and legislation has also been introduced to provide tobacco growers with a more generous buyout that also preserves an economic safety net. Congress should reject the very harmful proposal unveiled today and act instead to pass effective FDA tobacco authority and a more generous buyout, independently and on its own merits, rather than as a play to garner votes for an unrelated bill granting corporate tax cuts. We remain committed to working with tobacco farmers and tobacco-state lawmakers to achieve these goals.

 

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