No on I-773 Coalition Cites Alarmed Officials in Oregon, California On Effects of Higher...

News Editors, Political Writers

SEATTLE--(BUSINESS WIRE)--Nov. 1, 2001

News coming out of California and Oregon this week point up real and imminent dangers from smuggling due to unreasonable tobacco taxes, the NO on I-773 Coalition said in a statement today.

Oregon's

Department of Revenue issued a letter to tobacco retailers in September informing them of tightened tax compliance procedures. The letter read, in part: "Fewer Oregonians are smoking, but the decrease in the number of smokers fails to account for the loss of nearly $11 million in tobacco tax revenue that Oregon is experiencing each year. The Oregon Department of Revenue and the Oregon Legislature believe that nontaxed Internet sales, smuggling, and counterfeit tax stamps are responsible for much of the revenue loss."

California's Attorney General Bill Lockyer had a much more dire warning in a news release issued October 26, 2001: "Tobacco smuggling is not only a tax evasion issue, it also represents a real threat to the health and safety of Californians. These illegal, black market sales steal money from important state programs that help our children and send it to individuals engaged in criminal activities -- even terrorist organizations."

State Senator Steve Peace said in the same release: "Experts agree that California may be losing as much as $400 million annually to smugglers and tax evaders. The increase in the tax rate as a result of proposition 10 combined with industry price increases, in part to fund the national tobacco settlement, have created a climate for organized crime to enter the black market in California."

No on I-773 Coalition chair Tom Huff pointed out that: "If Initiative 773 passes, Washington will be have the highest tax in the nation, and we can expect criminal activity to go through the roof. If Oregon is losing that much revenue on 68 cents taxes per pack, we can expect much higher losses here in Washington at $1.42 a pack."

He also cited a news report last week (Peninsula Daily News) of arrests in Vancouver, B.C. that firmly ties profits from cigarette smuggling to middle eastern terrorist organizations. "We're letting ourselves in for a lot of grief by attempting to raise tobacco taxes to such ridiculous levels," he said. "It's time someone rang the alarm bell."

Huff said proponents of the initiative are quick to cite other state's experiences with reductions in teen smoking, "but they're leaving out the real life, everyday problems officials in high tax states face. And, since we've had a one-third reduction in teen smoking rates across the board (according to news reports this month), it's doubtful that you can tie these reductions to higher taxes as the proponents claim in their advertising."

"Anyway you look at I-773," Huff said, "you're looking at creating a host of problems with nothing in return. Except, maybe, a windfall in profits for big HMO's."

For more information, log on to www.stopi773.com.