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22-May-2006
Teen "cigars" just a tax dodge

Tobacco companies have found yet another loophole to evade taxes, dodge health restrictions and market their wares to teens. Fortunately, 40 state attorneys general haven't been fooled by attempts to pass off cigarette substitutes, in brown wrappers, as "little cigars."

The attorneys general, including Kentucky's Greg Stumbo, have asked the federal government to reclassify many of these so-called "cigars" as cigarettes. North Carolina, another big tobacco state, also joined in. Ohio did not, because the definition doesn't affect its tobacco settlement money.

The Treasury Department's Alcohol Tax and Trade Bureau lets tobacco companies decide for themselves if their product is a cigarette or a cigar. Cigars are taxed at half the price of cigarettes or less, and can be sold in smaller packs, making them more affordable for teens. The attorneys general say many "little cigars" are to all intents and purposes identical in ingredients to cigarettes except for the brown wrapper. TTB should put a stop to this sham that shortchanges tax revenue and often targets underage youth.

In March, the attorneys general hailed a 21 percent drop in U.S. cigarette sales since 1998, when they negotiated the $200 billion Master Settlement Agreement with the major tobacco companies. U.S. cigarette sales in 2005 hit a 55-year low with 379 billion consumed. Ohio and Kentucky officials all along have insisted their motive for the settlement wasn't just revenue to reduce state costs from smoking-related health care; it was also to reduce smoking rates especially among teens. But now we learn "little cigar" sales have more that doubled since 1998, to about 3.8 billion consumed in 2005. That offsetting growth rate is worrisome.

The AGs aren't objecting to traditional large cigars or their slimmer, unflavored versions. They agree there's a legitimate category of little cigars. It's the cigarettes disguised as "little cigars" that they're after. These bogus cigars - sold in the same varieties as regular cigarettes such as "light," "menthol" and "full flavor" - are often sweetened with flavors such as chocolate, vanilla, strawberry, peach or spearmint. It should be obvious these sweet-flavored "cigars" aren't marketed to the boxing crowd or the Marlboro Man. They are often sold in small "kiddie packs" of five or even single sticks that underage smokers can more easily buy.

TTB should reclassify these smokes for what they are - cigarettes - and enforce the taxes and the rules.

Tobacco is still the No. 1 cause of preventable death in the U.S. Federal officials should clearly define the distinguishing differences between cigarettes and cigars beyond just what they are wrapped in. Cigarettes must carry health-warning labels; most cigars do not.

Some tobacco company officials argue the government should punish unscrupulous manufacturers and not the industry as a whole. Fair enough, but it's not even fair to cigarette makers if their products are fully taxed and phony cigars are not.


Source: Cincinnati Enquirer