I won’t raise amusement tax, but cigarette tax hike possible

Mayor Rahm Emanuel on Tuesday ruled out raising the city’s amusement tax, but kept alive a cigarette tax hike provided the money is spent on improving children’s health. The Chicago Sun-Times reported last week that Emanuel was considering a one percentage point increase in the amusement tax — to 10 percent — that would have left Chicago with the highest ticket tax in the nation. On Tuesday, Emanuel took the amusement tax increase off the table and added it to the list of local taxes he has promised not to raise.

It happened when the mayor was asked whether he’s concerned that yet another increase in the cigarette tax would prompt even more smokers to drive across state lines to purchase cartons of cigarettes at a cheaper price. “Well, first of all I haven’t made a decision on that, but I can say this: There’ll be no property tax increase. There’ll be no sales tax increase. There’ll be no fuel tax increase. We’re eliminating the per-employee head tax, which was a job-killer. We’re doing it ahead of schedule. And there will be no amusement tax increase,” the mayor said.

“If we do consider [raising] the cigarette tax, it has to invest in children’s health.” The mayor’s spokeswoman Sarah Hamilton later disclosed that Emanuel has also ruled out a fee for garbage collection that would have mirrored the fees imposed in many suburbs. Chicago’s per-pack cigarette tax was increased by 32 cents in 2005 and by 20 cents in 2006. That raised the city’s tax to a whopping 68 cents. At $4.67-a-pack, Chicago now has the nation’s second-highest combined state and local tax rate on cigarettes. New York City tops the list at $5.85-a-pack. Chicago’s two-tiered amusement tax was last increased in 2009 — from 4 to 5 percent for mid-sized venues and from 8 to 9 percent for large sporting events.

The lower tax rate applies to live theatrical, musical and cultural performances in venues with more than 750 seats. Smaller theaters are exempt. Until an ill-timed controversy over the conservative politics of Joe Ricketts, patriarch of the billionaire family that owns the Cubs, team owner Tom Ricketts was still hoping to use 35 years’ worth of amusement tax growth to help finance a $300 million renovation of Wrigley Field. Emanuel was prepared to sign off on that plan, a $150 million variation of a financing scheme he once called a “non-starter.”

The other $150 million would have come from relaxing Wrigley’s landmark status to allow the Cubs to wring more advertising and sponsorship revenue out of the stadium. Any increase in the amusement tax would have increased the city’s $88.2 million-a-year take and reduced the number of years the Cubs would need to siphon growth to renovate Wrigley. But it would also have encountered strong opposition from live theaters, movie theaters and from Chicago’s five professional sports franchises: the Cubs, Sox, Bears, Bulls and Black Hawks. City Hall announced last week that a 2013 budget shortfall pegged at $369 million just two months ago has been reduced to $298 million, thanks to rising revenues and greater than anticipated savings from the mayor’s “wellness” plan to curb skyrocketing health care costs.

That allowed Emanuel to move up by six months his plan to eliminate the head tax. Emanuel’s first budget was balanced with $220 million in taxes, fines and fees and 535 layoffs. It doubled water and sewer rates over the next four years, locked in annual cost-of-living increases after that and raised city sticker fees by $10 to $15, also followed by annual inflationary increases. It raised the city’s hotel tax from 3.5 to 4.5 percent, hiked a laundry list of criminal, nuisance and parking fines and imposed a $2-a-weekday hike in parking taxes billed as a “congestion fee,” even though it is confined neither to rush periods nor congested downtown and River North areas.

Aldermen also signed off on the mayor’s plan to close three district police stations and eliminate 1,252 police vacancies to save $82 million. This year, the mayor is planning “targeted layoffs” and more “managed competition” between city employees and private contractors, including vehicle booting. Police and fire cuts that could be substantial must await the outcome of contract talks with those unions. That will force Emanuel to include a placeholder pay raise for police officers, firefighters and paramedics that may or may not be big enough.

Tobacco Companies Cough Up Campaign Cash In California

Tobacco companies have spent more than $49 million in campaign contributions in California over the last 18 months. A new report from the American Lung Association lays out exactly what the companies spent their money on. The report is based on figures from the Secretary of State. It reveals tobacco companies spent more than $46 million to defeat a tobacco tax initiative on the June ballot.

They laid out an additional $1.6 million to persuade lawmakers to vote against certain bills. The American Lung Association's Lindsay Freitas said tobacco companies also gave money to candidates campaigns. "I think the legislators themselves need to be aware of what it means when they take this money. They're taking money from these industries that have a real poor track record," Freitas argued. Since the 2003-2004 election cycle, tobacco companies have spent nearly $126 million on political activities in California.

FDA taps 6 ad agencies, including Mullen, for anti-tobacco campaign

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The Food and Drug Administration has chosen six ad agencies to help it develop and implement large-scale, nationwide public health education campaigns designed to change attitudes and behaviors toward using tobacco.

 The agency confirmed today that agencies handling different tasks under the contract include Mullen Communications, WPP’s Grey Global Group, independent agency Riester, the American Legacy Foundation, True North Communications (DraftFCB), and Interpublic Group’s Campbell-Ewald. The maximum ceiling for the contract, which was devised a year ago, is $390 million over a period of five years. The agency said tobacco use causes more than 400,000 deaths each year in the United States, about one out of every five deaths.

Senate panel OKs tobacco health warnings

Senate committees on Health and Demography and Trade and Commerce have recommended the approval of Senate Bill (SB) no. 3283 authored by Health and Demography committee chair Senator Pilar Juliana “Pia” S. Cayetano. “Cigarette packages and other tobacco product packages found in the market including package insert and onserts, and any outside packaging and labelling, shall bear highly visible full color ‘picture-based health warnings... ‘ that shall have two components: a photographic picture warning and an accompanying textual warning that is related to the pciture.”

The warnings aim to “effectively warn of the devastating effects of tobacco use and exposure to second hand smoke.” Manufacturers will pay a fine of P1 million and P5 million for first and second offense, respectively, if they fail to comply. Third offense will require a fine of P20 million or imprisonment of not more than five years and business permits and licenses will be cancelled.

A fine of P5,000, P10,000, and P20,000, for first, second, and third offense, respectively, will be imposed to retailers or sellers of products with the required picture-based warnings. Business permits of retailers will be cancelled on third offense as well. Two similar measures, House Bills no. 2510 and 3693, are pending at the committee level.

Politicians endorse support for tobacco control policies

In next general elections, voters should not vote for those candidates who smoke, appeal a groups of 40 Rawalpindi politicians belonging to major political parties of the country. This appeal was made from the forum of TheNetwork for Consumer Protection that was organized in Rawapindi to muster the local proticians support for the enforcement of tobacco control laws in the country.

Nadeem Iqbal, Executive coordinator said that the leaders of the political parties should take a queue from their politicians and should not award tickets to the smokers that it will jeopardize their commitment to promoting public health. Politicians endorse support for complete ban on Tobacco Advertising, Promotion and Sponsorship and effective enforcement of tobacco control laws.

Activation of District Implementation Committee (DIC) for stringent enforcement measures, headed by District Coordination Officers (DCOs), re-notification of federal and provincial Advertisement Guidelines Committees was emphasized by leaders and district representatives of major political parties. Politicians resolute the enforcement of Prohibition of Smoking & Protection of Non-smokers Health Ordinance 200 and Pakistan Tobacco Vendors Act 1958 in a session for parliamentarians and politicians organized by TheNetwork for Consumer Protection in Rawalpindi.

 Tahira Aurangzaib, Member National Assembly (MNA) suggested parents to play their role in effective manner to reduce tobacco consumption among youth. Sultan Mahmood Qazi, senior leader and Member Central Executive Committee, Pakistan Peoples Party (PPP) emphasized to allocate sufficient budget for health sector to tackle the growing tobacco disease burden in Pakistan. He promised to highlight the recommendations of TheNetwork for Complete Ban on Tobacco Advertising, Promotion and Sponsorship in party meetings to include tobacco control in charter of Pakistan Peoples Party.

 Pakistan Tehrik-e-Insaaf (PTI) which has recently introduced its health policy, Farah Agha, President PTI Rawalpindi & Islamabad (Women Wing) suggested religious clergies to advocate people for quit smoking and following tobacco control laws through Juma sermons. Fouzia Naz, General Secretary (Women Wing) Pakistan Muslim League (Q) suggested to include tobacco control in curriculums of young children to save Pakistani youth from tobacco hazards. District representative of MQM suggested to banish tobacco sale points from residential areas.

Companies spent less on cigarette, smokeless tobacco promotion in recent years

The nation’s top tobacco companies spent less money on advertising and promotion of cigarettes and smokeless tobacco products in recent years, according to the latest data from the Federal Trade Commission. Numbers released Friday show cigarette marketing decreased more than 5 percent to $8.05 billion in 2010, the latest year available, compared with a year earlier. Meanwhile, cigarette sales decreased about 3 percent to 281.6 billion cigarettes in the same period.

As in years past, much of the money spent by cigarette makers, about 81 percent or $6.49 billion, was for price discounts paid to retailers and wholesalers to reduce the price of cigarettes to consumers as the average price per pack continued to increase to $5.73 in 2010. Rising prices stemmed from a large federal tax increase on tobacco products in 2009, coupled with various state tax increases.

 In 2009, the Food and Drug Administration also was given authority to regulate the industry, which included further marketing restrictions, including a ban on tobacco companies sponsoring athletic, social and cultural events or offering free samples or branded merchandise. Several other tobacco marketing changes are being challenged in federal court. According to the latest numbers, money spent on marketing smokeless tobacco products decreased nearly 10 percent to $444.2 million from 2009 to 2010 as sales increased 6.5 percent.

Companies spent about 19 percent, or $95 million, on price discounts to wholesalers and retailers in order to reduce prices to consumers in 2010. Smokeless tobacco advertising and promotion had reached an all-time high of $547.9 million in 2008 as tobacco companies look for cigarette alternatives for sales growth as tax hikes, smoking bans, health concerns and social stigma make the cigarette business tougher. The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 20 percent, according to the Centers for Disease Control and Prevention.

But the decline has stalled since about 2004, with about 46 million adults in the U.S. smoking cigarettes. It’s unclear why it hasn’t budged, but some experts have cited tobacco company discount coupons on cigarettes and lack of funding for programs to discourage smoking or to help smokers quit. According to the most recent federal data, about 3.5 percent of American adults use smokeless tobacco. The Federal Trade Commission has issued reports on cigarette marketing since 1967, and similar reports on smokeless tobacco since 1987. It looks at data from the top tobacco companies including: Richmond, Va.-based Altria Group Inc., parent company of Marlboro maker Philip Morris USA; Winston-Salem, N.C.-based Reynolds American Inc.; Lorillard Inc., based in Greensboro, N.C.; and Commonwealth Brands Inc., the Bowling Green, Ky.-based subsidiary of the British company Imperial Tobacco.

BAT invests in a smokeless future

British American Tobacco, the world’s second-biggest tobacco company by sales, is investing more than £100m to develop smoking alternatives as new tobacco bans and higher taxes persuade more smokers to extinguish their butts. Speaking to the FT, Nicandro Durante, BAT’s Brazilian-born chief executive, said the company was looking at several lower-risk alternatives to traditional cigarettes such as non-combustible cigarettes, which heat tobacco rather than burn it, and nicotine inhalers. 

“I think that, [in] the future, there will be consumers who go for a cigarette [or] a non-combustible product and consumers who go for a nicotine-based product – so this is something we have paid a lot of attention to over last one and a half years,” he said. Mr Durante added that the size of the market for tobacco alternatives could account for as much as 40 per cent of BAT’s revenues – which were £15bn in 2011 – in 20 years’ time. “It will be sizeable in 20 years’ time … it’s going to grow,” he said. The move into smoking alternatives comes as the tobacco industry faces increasing regulation in western markets and also emerging economies such as Brazil, South Africa and Uruguay.

The smokeless tobacco market, which also includes chewing tobacco and snuff, was worth $14bn of the $664bn world tobacco market, according to Euromonitor in 2011, with cigarettes accounting for more than 90 per cent of the total. In the UK, the biggest component of the market for cigarette substitutes is electronic cigarettes, dubbed e-cigarettes, which are not regulated. Mr Durante said regulating the sector would be key to the commercial success of cigarette alternatives. “At the end of the day, if these kind of products will be successful, say pure nicotine products, you need to have a health claim to help consumers to navigate on that,” said Mr Durante.

“So the regulators will be fundamental [in doing that].” In the 1980s, the US conglomerate RJR Nabisco developed one of the first smokeless cigarettes, called Premier, at an estimated cost of more than $300m. It turned out to be a commercial flop amid concerns about its poor taste and bad smell. “[RJR Nabisco] were not successful because they didn’t give any satisfaction to the consumer … the intake of nicotine compared to normal cigarettes was extremely low so they didn’t feel satisfaction,” said Mr Durante. “If you don’t satisfy consumers, you’re not going to win them.” Soon after he was appointed chief executive in March last year, Mr Durante established Nicoventures, a BAT division devoted to cigarette alternatives. It plans to launch a nicotine inhaler by the end of 2014.