SB000238 95130098 T i l 3240568 - Legacy Tobacco Documents ...

SB000238 95130098 Til 3240568
Sunmary of Statement by Jackie Giso
on behalf of the National Association of Tobacco
Distributors(N.A # T.D.)
before the Senate Finance Committee 9-10-85
The National Association of Tobacco Distributors(NATD),which represents
the wholesale-distribution industry selling tobacco and other
products having an estimated annual wholesale value of over $16 billion
dollars,urges the committee to comply with the intent of Public Law 97-248,
which contains a "sunset" provision that would reduce the cigarette tax
rate from 16 cents to 8 cents per pack on October 1,1985. The NATO also
urges the Committee to adopt a floor stocks tax rebate provision,similar
to the one considered for inclusion in last year's Deficit Reduction Act
(P.L.98-369),that would provide for refunds of 8 cents for every pack held
in inventory on October 1,1985.
The NATD's testimony indicates that a floor stocks rebate provision
should be passed by the Congress and signed by the President prior to
October 1,1985. In supporting the "sunset" provision, the NATD points out
that tobacco excise taxes are regressive, that tobacco is unfairly being
singled out,and shows the impact of State excise tax increases on the Federal
decision relating to cigarette excise taxes.

SB000238 95130098 Til 3240569
STATEMENT OF JACKIE GISO r PRESIDENT
JACKIE GISO f INC.,
CRANSTON, RHODE ISLAND
BEFORE THE
SENATE FINANCE COMMITTEE
ON
CIGARETTE EXCISE TAXES
SEPTEMBER 10, 1985
Mr. Chairman and members of the Committee.
My name is
Jackie Giso, President of Jackie Giso r Inc., a tobacco wholesale
distribution company based in Cranston, Rhode Island,
I am a member of the National Association of Tobacco Distributors
(NATD), which represents over 570 small business
wholesaler-distributor members, with over 740 distribution
outlets.
Our Association also represents 230 manufacturer and
supplier associate members whose 12,000 salesmen canvass and
supply almost 1.5 million retail outlets selling tobacco products
across the United States.
Our industry markets goods with an
estimated annual wholesale value of over $16 billion dollars.
We appreciate the opportunity to present NATD ! s position on
whether the current level of federal cigarette excise tax should
be extended beyond September 30, 1985. The NATD urges this
Committee to comply with the intent of Public Law 97-248, the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA), which
contains a "sunset" provision that would reduce the tax rate from
16 cents to 8 cents per pack on October 1, 1985. In addition, we
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SB000238 95130098 Til 3240570
believe that the Committee should also adopt a floor stocks tax
rebate provision r similar to the one considered for inclusion in
last year's. Deficit Reduction Act of 1984 (P.L. 98-369), that
would provide for refunds of 8 cents for every pack held in
inventory on October 1, 1985.
I would like to emphasize some of our policy considerations
regarding the sunset provision and rebates.
Rebates
In 1983, the TEFRA cigarette tax increase placed a
significant burden on wholesalers because it included a floor
stocks tax. According to the Treasury Department, the one-time
tobacco floor stocks tax on inventory held on January 1, 1983
produced $180 million in revenue, all of which was paid by the
tobacco wholesale industry. With the scheduled lowering of the
federal cigarette excise tax, the opposite should occur. There
should be a rebate of the taxes which have already been paid on
inventory held on October 1, 1985. Legislative language should
be included in the House and Senate tax bill, as was included by
the House Ways and Means Committee last year, to include a floor
stocks rebate for such inventory. At this time, Mr. Chairman, I
would like to include in my testimony a copy of a letter which
was sent by Steve Bloom, Chairman of the NATD's Legislative
Committee and a member of the Executive Committee, to the
Chairman of the House Ways and Means Committee, Congressman Dan
Rostenkowski(D-Ill),outlining the floor stocks rebate language we
support. We would urge you to include this language in Senate
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SBQ00238 95130098 Til 3240571
legislation prior to the end of this month.
Tobacco Excise £az££ &££ Regressive
It is unfair to place the burden of deficit reduction on
cigarette excise taxes. These taxes are regressive taxes because
their impact is proportionally greater on persons with low and
moderate incomes. Regressive taxes should not be utilized as a
means either to recoup federal deficits, or to reduce through
earmarking, any deficits in specific programs such as Medicare.
This latter point is true now more than ever because of the
greatly improved financial situation of the Medicare Trust Fund.
ImEaSfc 01 State Excise £&& Increases
Keeping the federal excise tax at 16 cents ignores the
policy of leaving to the states any potential revenue to be
derived beyond the basic 8 cents federal excise tax. As least
sixteen states have already passed contingent tax increases based
on the sunset provision. Eight states have pending contingent
tax legislation. We recall that the Administration several years
ago had proposed an elimination of federal cigarette excise taxes
as part of its "New Federalism" initiatives, by stating that such
taxes should be State revenue options. Given recent proposals to
reduce revenue sharing and block grants, and to eliminate deduc
tions for state and local income taxes f it is important that some
revenue-generating areas be preserved for States.
Tobacco Unfairly Singled Qut
Of the various federal excise taxes which could be raised,
tobacco was singled out for a substantial tax increase.
We
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elieve that excise taxes in several are repressive r but
certainly tobacco should not be discriminated against.
Thank you for this opportunity to present our views*
SB000238 95130098
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