N.C. Senate OK's tax breaks on cigarette exports (fwd)

[Robert Weissman <rob@essential.org>]

N.C. Senate OK's tax breaks on cigarette exports

RALEIGH, N.C., July 9 (Reuters) - State senators in North Carolina -- which
is set to
receive $4.6 billion from a multi-state legal settlement with Big Tobacco --
have approved
tax breaks for companies that sell cigarettes abroad. ``It is a strange
paradox, no doubt about it,'' Senate Minority Leader Patrick Ballantine,
R-Wilmington, said Friday. ``We're giving tax credits to the very companies
that are having to pay the settlement,'' said Ballantine, who helped pass the
measure in a 43-2 vote on Thursday. North Carolina last autumn learned it
would receive more than 2 percent of the $206 billion nationwide settlement
of a lawsuit filed to recoup state-level costs of providing health care for
smoking-related illnesses.

The new tax-break proposal, which awaits what was expected to be a rubber
stamp in the House, would allow tobacco companies to subtract up to $6
million from their annual taxable corporate income on tobacco-related
exports. Philip Morris Cos. (NYSE:MO - news) and R.J. Reynolds Tobacco
Holdings Inc. (NYSE:RJR - news) are expected to take advantage of the
breaks, Ballantine said.  Lawmakers backed the proposal because North
Carolina has a legacy of tobacco farming and cigarette production, and
because the state hopes to lure jobs from a Kentucky cigarette plant that is
slated for closure, he said. Sen. Ellie Kinnaird, D-Chapel Hill, opposed the
measure.

``We are subsidizing what we know is a failing industry,'' she said. ``We're
pouring money down a black hole.'' In addition, she said, the tax breaks
burden North Carolina residents with the cost of tobacco litigation and
promote smoking overseas.``This is not a responsible decision,'' Kinnaird
said. ``As public policy, it's very short-sighted.''
	
Raleigh News & Observer, July 8, 1999
Senate OKs tax breaks for tobacco  companies 

 By LYNN BONNER, Staff Writer

Senators praised tobacco companies Thursday for their contributions to
communities, education and the state's economy before overwhelmingly
approving tax credits for cigarette exports. 
The bill would allow Philip Morris and R.J. Reynolds Tobacco Co. to  take
reductions in their corporate income tax bills for shipping cigarettes
overseas.   The tax breaks, approved by a vote of 43-2, are capped for each
company at $6 million a year, or half of their annual tax bills, whichever
is  less. This year, the credits will be worth a total of about $9 million.

Senators said that about 1,400 manufacturing workers owe their jobs to the
companies' exports.  "We know that these jobs are important to our counties
and to our states," said Sen. Linda Garrou, a Winston-Salem Democrat and
sponsor of the measure.  The Senate attached the tax breaks and a provision
setting out penalties for the illegal domestic sale of cigarettes meant for
export to a tobacco bill already approved by the House. The bill now goes
back to the House for a vote on the changes.  

The appreciation voiced for tobacco companies contrasted sharply with the
rebukes and challenges tobacco companies face outside the Legislative
Building.  On a day that front pages of the nation's newspapers carried
stories about a Florida jury's finding that the five biggest tobacco
companies conspired to hide the danger of cigarettes, Sen. Patrick
Ballantine, a Wilmington Republican, reminded his colleagues that tobacco
money built prestigious universities in the state, including Duke and Wake
Forest.  Others praised R.J. Reynolds as a source of generous charitable
contributions and good jobs.  Sen. John Kerr, a Goldsboro Democrat, said tax
credits will help persuade the companies to keep their North Carolina
factories running.  "If we keep these great corporate citizens, they will
buy North Carolina tobacco," he said.  

Along with the praise were a few voices of dissent.  Democratic Sens. Ellie
Kinnaird of Carrboro and Bill Martin of Greensboro said they didn't want the
state to promote the exportation of cigarettes to countries that don't fight
youth smoking or warn against its dangers to health. Both voted against the
bill.  "It is not right for us to export a product we know kills people,"
Kinnaird said. "I hope my farmers understand, but I feel it is a matter of
conscience."