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Action on Smoking and Health
A National Legal-Action Antismoking Organization Entirely Supported by Tax-Deductible Contributions
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By JOHN REID BLACKWELL Richmond Times-Dispatch [04/22/04]
Gov. Mark R. Warner failed yesterday in his attempt to keep Virginia from losing tobacco settlement money by making some independent cigarette companies pay more.
Warner had attached the proposal as several amendments to an unrelated House of Delegates bill dealing with cigarette tax stamps. House Speaker William J. Howell ruled that the amendments were not relevant to the original bill, which killed the proposal without a vote or debate.
The proposed change sought to stop independent, mostly discount-brand cigarette companies from gaining a price advantage over the four largest U.S. cigarette manufacturers, which are making yearly payments of billions of dollars to the states under the 1998 national tobacco settlement.Cigarette companies that did not join the settlement are required to make escrow payments in states where they do business, but the law allows them to obtain refunds of much of that money, which means they can cut their prices.
The National Association of Attorneys General says this so-called "loophole" is costing the states settlement money as major tobacco companies lose sales to discount brands. Those increasing sales have cost Virginia more than $12 million this year, the organization estimated. Twenty six states have passed laws closing the loophole.
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