[Intl-tobacco] End The Export Subsidy for Big Tobacco! (fwd)

[Robert Weissman]

From=20the Campaign for Tobacco-Free Kids. Please respond to
jglanz@tobaccofreekids.org, not to this list.


End The Export Subsidy for Big Tobacco!

Dear Colleagues:

Attached is a letter to President Clinton asking the Administration to
eliminate tax breaks for U.S. tobacco company exports. Currently, under
the Foreign Sales Corporation (FSC) program, U.S. tobacco companies can
legally avoid paying taxes on a portion of their profits from cigarette
exports. This program has been challenged by the European Union at the
World Trade Organization (WTO), and the Administration is trying to devise
a replacement program that would comply with WTO rules. We are asking that
tobacco companies be excluded from whatever they come up with.=20

What You Can Do:

1. Sign-on to the letter to President Clinton by close of business, Monday,
June 5th. Please send organizational endorsements to: Judy Glanz, Campaign
for Tobacco Free Kids, e-mail: <mailto:jglanz@tobaccofreekids.org>; fax:
202-296-5427.=20

2. Contact your Congressional representative and encourage them to sign-on
to =93the Doggett letter to end taxpayer subsidies for tobacco exports=94, =
which
currently has 68 co-signers. A copy of that letter and a list of current
signatories is also attached. Congressional endorsements can be sent to
Lindsay at Rep. Doggett=92s office; tel. 202-225-4865.


Thanks



Dear President Clinton:

As your negotiators seek an agreement with the European Union on their
challenge to U.S. export subsidies at the WTO, we are writing to ask you to
exclude U.S. tobacco companies from any future program designed to enhance
America=92s export competitiveness. Currently, tax subsidies for U.S.
cigarette exporters under the Foreign Sales Corporation program cost
American taxpayers $100 million a year.=20

The dangers of nicotine addiction to our children are well-known:  three
thousand young Americans each day become regular smokers =96 the leading ca=
use
of preventable death in America. But these dangers do not stop at our
shores. Globally, the World Bank estimates that between 80,000 and 100,000
kids become addicted to cigarettes every day. With increasing pressure in
the United States to stop hooking our kids on nicotine, the big tobacco
companies are, with the unwitting support of American taxpayers, trying to
addict new generations of smokers overseas. Tobacco-related illnesses kill =
4
million people a year around the globe. If current trends continue, by 2030=
,
ten million people will die every year, 70 percent of them in developing
countries.

The tobacco industry should not receive any assistance from the U.S.
government in their quest to addict new generations of smokers overseas. At
a time when your Administration is taking strong action against the tobacco
companies for their deception and misconduct in the United States, we ask
that they not be rewarded through select provisions of the tax code for
their misconduct overseas. Thank you for your attention to this matter.

Sincerely,


cc. Lawrence Summers
Stuart Eizenstat
Lloyd Doggett



=20
May 1, 2000
U.S. will take plan to Europe
By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) _ Trying to overturn the worst trade defeat the United
States has suffered at the World Trade Organization, the Clinton
administration said Monday it has achieved strong bipartisan backing for
proposed changes to a tax benefit provided to American exporters. Deputy
Treasury Secretary Stuart Eizenstat was to present the proposal in
discussions Tuesday in Brussels with officials of the European Union.

The 15-nation EU successfully challenged the $4 billion annual tax break fo=
r
U.S. exporters before the WTO, which ruled earlier this year that it
represented an illegal export subsidy. Eizenstat told an audience at the
U.S. Chamber of Commerce on  Monday that he had discussed the administratio=
n
proposal with top Republicans and Democrats in the House and Senate as well
as the U.S. business community.

=93We will go (to Brussels) with united support from the business community=
,
from congressional leadership,=94 Eizenstat said. =93That will give us a ve=
ry
strong hand in our discussions.=94 Eizenstat will have discussions over the
next two days with Pascal Lamy, the EU's top trade negotiators, and other
European economic officials in Brussels, London and Paris.  Eizenstat
refused to reveal details of his plan to reporters but
he said the proposal was the result of  =93intensive discussions=94 the
administration has held with tax experts in both the House and Senate.

The United States has until Oct. 1 to comply with the WTO decision that its
Foreign Sales Corporation program is an illegal trade subsidy. After that
date, the EU could retaliate with higher tariffs on American products. The
program, which was created in 1984, allows some 6,000 U.S. companies
including Boeing, General Motors, Microsoft and United Technology, to reduc=
e
income taxes by up to 15 percent by creating export subsidiaries in tax
havens such as the Virgin Islands and Barbados.

The intent of the program was to offset an EU tax rebate given to European
companies for goods sold overseas. Eizenstat has held discussions with Rep.
Charles Rangel, D-N.Y., the senior Democrat on the Ways and Means Committee=
;
House Ways and
Means Committee Chairman Bill Archer, R-Texas, and Senate Finance Committee
Chairman William Roth, R-Del. Aides said the gist of the administration's
proposal is to repeal the Foreign Sales Corporation program entirely and
then lower income taxes on the foreign subsidiaries of U.S. companies to
make up the difference. This would avoid European Union charges of unfair
trade practices by applying not only to U.S. exports from these subsidiarie=
s
but also to products they make overseas and sell back to the United States.
No cost estimated was immediately available.
=20

Rep. Doggett=92s  Letter To End Taxpayer Subsidies For Tobacco Exports


May 10, 2000

The Honorable Stuart E. Eizenstat
Deputy Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C.  20220

Dear Secretary Eizenstat:

In your position as the lead Administration official charged with
implementing an acceptable response to the adverse World Trade Organization
(WTO) decision on Foreign Sales Corporations (FSC), we urge you to provide
leadership in terminating any benefit for export of tobacco products.=20

As you are well aware, through FSC, US businesses export domestically
manufactured goods and shelter a portion of that income from US taxes.
Despite earlier estimates that the FSC provision accounts for $2 billion in
lost revenues annually, new estimates show that the FSC accounts for at
least $4 billion a year, soon to grow to $6 billion annually.  The latest
available data from the Statistics of Income division at the Internal
Revenue Service (Spring 2000 Bulletin, analyzing 1996 tax year) show tobacc=
o
products sold through FSC=92s accounted for $100 million in lost tax revenu=
e
in 1996 (almost $7 billion in gross foreign tobacco sales through FSC=92s,
providing $285 million in exempt income).  There is no justification for
compelling American taxpayers to support a $100 million tax subsidy annuall=
y
for the benefit of US tobacco companies.

The dangers of nicotine addiction to our children are well-known:  three
thousand young Americans each day become caught up in a nicotine habit ??
our leading cause of preventable death in America.  But these dangers do no=
t
stop at our American shores.  With increasing pressure to stop hooking our
kids on nicotine, the big tobacco companies have turned to other people=92s
kids by peddling nicotine around the globe.

Since 1990, while Philip Morris=92s sales have grown minimally in the Unite=
d
States, they have grown by 80% abroad.  Smoking currently causes more than
3.5 million deaths each year throughout the world.  Within 20 years, that
number is expected to rise to 10 million, with 70% of all deaths from
smoking coming in the developing countries that are the newest targets in
big tobacco=92s continued addiction to making money at the expense of human
lives.  In fact, tobacco will be the leading cause of disease and premature
death worldwide -- bypassing communicable diseases such as AIDS, malaria,
and tuberculosis.  There is no reason that the American taxpayer need
contribute to this export of death and disease, where the result, intended
or otherwise, is more children around the globe smoking.

The legislative history of the FSC provision (formerly DISC) shows exclusio=
n
from benefits for certain products for a number of reasons: the domestic
supply not adequate to meet domestic demand (1971); products already
receiving other government subsidies (1971); natural resources and energy
products where cost depletion allowable (1975); products subject to export
controls (1975); military products on the munitions list (1976); unprocesse=
d
timber (1993).  In some cases, the exclusion of products from export
benefits promotes congruence with other federal government policies, as wit=
h
items subject to the Export Administration Act.  Other reasons for
prohibiting certain items over the years have ranged from difficulty in tax
administration (as with intangibles), benefits unnecessary due to high
foreign demand (see 1976 House vote eliminating agricultural products), and
concern for displacement of US jobs (as with timber). =20

As you know, this Administration is pursing legal remedies against the
tobacco companies for decades of deception and addiction and has proposed
allowing the Food and Drug Administration both to regulate tobacco as a
drug-delivery device and to control access to minors.  We seek your help to
end the contradiction of using the tax code to encourage US companies, whic=
h
export products that, when used as intended, result in addicting children
abroad to nicotine and pushing them down a path to cancer, heart disease,
and emphysema.  We urge the elimination and exclusion of these products fro=
m
any new FSC law.
=09=09=09=09=09

Sincerely,


Current List of Signatories, as of 26 May 2000

Ackerman
Allen
Baldacci
Blagojevich
Bluemenauer
Brown, Sherrod
Capps
Capuano
Conyers
DeFazio
DeLauro
Deutsch
Doggett
Eshoo
Farr
Frank
Ganske
Green
Gutierrez
Hansen
Hastings
Hinchey
Holt
Hooley
Jones, Stephanie Tubbs
Kildee
Kind
Kucinich
LaFalce
Lampson
Lantos
Levin
Lewis
Lofgren
Lowey
Luther
Maloney, Carolyn
Markey
Matsui
McCarthy
McDermott
McGovern
Meehan
Millender-McDonald
Miller, George
Moakley
Nadler
Neal
Olver
Owens
Pallone
Payne
Pelosi
Rivers
Rodriguez
Rothman
Royal-Allard
Sanders
Schakowsky
Serrano
Slaughter
Snyder
Stark
Tierney
Waxman
Weygand
Woolsey
Wu