tobacco will decline by such a large amount as to eliminate the potential
revenue gains. The evidence from Canada, which has raised its tobacco tax far
more than has been suggested for our country, indicates that this claim is
false. While a tobacco tax Increase and counteradvertising will help reduce
tobacco use, a core of tobacco users will remain. While many smokers will
quit and many children will never take up the habit, others will continue to
smoke despite our best effort to discourage them. As a result, a tobacco tax
increase of the magnitude that has been proposed for this country will produce
significant new revenue even if a portion of it is set aside for worthy
programs like those I have outlined.
Mr. Chairman, the President's tobacco tax proposal is good health policy
as well as a source of revenue. A tax increase of greater magnitude than the
President has proposed would be even more beneficial for the health of this
nation, especially for the children of this nation, and a portion of the
additional revenue could be used to promote some Important goals for the
health and well-being of our citizens. I hope you and the other members of
this committee will see fit to adopt the measures I have proposed. Thank you
for your consideration of my thoughts on this Important subject.
Chairman RosTENKOWSKl. Thank you. Are there any questions?
Mr. A^fDREWS. Thank you very much. Dick, let's talk about kids
some more. If 1,000 Americans die every day from using tobacco
products and that is about an accurate number, about 1,000 people
every day die, where does the tobacco industry go to replace those
Mr. DURBIN. They are trying to go overseas. They are trving to
export their products into other countries. The tobacco addiction
level in Asian countries has been changing dramatically because,
for one thing, women are starting to smoke in Asian countries for
the first time. But their base market in America is among the kids.
I mean, they aren't going to convert a person who hasn't smoked
up to the age of 25 to get started, usually. That is really rare. But
they go after kids. And you ask the average smoker today, when
did you start? "I started in my teenage years."
Mr. Andrews. Well, the truth is about half of all the new smok-
ers every day are under 13 years of age. They are teenage children.
They are not 19-year-olds, they are not seniors in high schools,
they are under 13 years of age. What do you think will happen?
What has been the proven result with States that raise their taxes
like California and Florida as it relates to teenage smoking chil-
Mr. DURBIN. Teenage smoking is reduced, and it has been shown
in Canada, when they raised it to $3 a pack, 61 percent of the kids
quit. I mean, you have got to ask yourself, this is the bottom line
here we are talking about. We are talking about whether we want
kids to keep smoking. If the answer is yes, then throw out this tax.
If the answer is we want to stop them, here we have a chance to
Mr. Andrews. Mr, Markey, Ed, I would like to ask you a ques-
tion about the revenue stream itself. Because that is what you fo-
cused on in your remarks. This is really a twofer, isn't it? It dis-
courages kids from taking up smoking, but it really tries to offset
some of the cost to all of us as taxpayers to try to take care of the
people that get sick from using tobacco products.
As American taxpayers we spend $24 billion a year to take care
of people that get sick from smoking. The offset by raising that tax
will really not oreak even, will it, in terms of breaking us even in
terms of what taxpayers spend every year?
Mr. Markey. No. You put your finger on it. This is a two-for-one
special. You reduce the number of new candidates for disease relat-
ed to smoking, and at the same time you are finding the revenue,
appropriately, from the sources of the problem, to pay for the treat-
ment of these diseases.
I think the more that we can relate the tax system in our coun-
try as it relates to health care to the causes of disease, the better
ofr we will be in terms of reducing our need to project increases in
our health care system. And I think that alcohol and other areas
as well need the same kind of close examination.
Mr. Andrews. That is a very good point. I would just ask both
of you, when they had the debate in California over raising their
taxes, and as Dick said earlier, they plowed some of that money
importantly back into counteradvertising, but that was a very
healthy debate, wasn't it, on whether or not to raise tobacco taxes
in CaHfomia? It passed overwhelmingly, because I think most Cali-
fornians recognize the connection between raising tobacco taxes
and taking care of people that get sick from smoking.
Would you all care to comment on that?
Mr, DURBIN. Let me say this, Mike. The tobacco lobby in Wash-
ington fears one thing more than anything else, daylight. Take an
issue that we are discussing today, put it out in daylight, ask the
Members to vote on it, they are going to lose every single time be-
cause our constituents understand this.
For some reason, we get lost in the minutiae, we get lost in the
political arguments. But in 1987, when I got the issue of smoking
on airplanes to the floor, the House spoke, and the Nation followed
This is a similar issue when it comes to protecting our kids. Defy
the tobacco lobby. Put this on the floor, and you know as well as
I do, you will not only get the support in Congress, you will get the
support back home.
Mr. Andrews. Thank you, Mr. Chairman.
Chairman RosTENKOWSKi. Mr. Levin.
Mr. Levin. Thank you, Mr. Chairman.
And I thank you both for your eloquent statements and I am
glad to join Mr. Andrews in the earlier bill on this subject.
You know, reading the testimony of our colleagues and hearing
your testimony, it does raise the question that Mr. Hoagland raised
earlier. There is clearly an economic basis for some of the political
dynamic here. Essentially the argument is almost always framed
in terms of economic dislocation. Sometimes the civil liberties argu-
ment is raised, but I don't think very seriously.
Let's spend just a minute or two on whether we can do more to
really cut the cord or not on this issue by undermining the eco-
nomic dislocation issue more effectively. Are we anywhere on this
besides a little research? Why don't we do better?
Mr. DuRBiN. Sandy, the elements at work here are at least two-
fold. First, as the number of smokers in America decline, the de-
mand for tobacco declines as well and makes it tough for tobacco
farmers. And second, the cigarette companies are no friends of
American tobacco farmers and don't take my word for it, take a
look at the last reconciliation bill. The tobacco farmers stood up
and said we have had enough of imported tobacco. These compa-
nies that have enjoyed a free ride in Washington, D.C., for genera-
tions, shall no longer get it if they are going to be importing to-
bacco overseas, because they are disadvantaging tobacco growers in
the United States.
And so the tobacco growers and farmers led a movement, a real
domestic content movement, if you will, in terms of the future of
the tobacco industry. But the writing is on the wall and our friends
from tobacco growing States have come to me privately as they
have come to you and said we understand we are up against it
here, from the health viewpoint and the economics viewpoint, our
days are numbered.
They have asked me to give them a helping hand, as I said ear-
lier, and I tried do it in the Agriculture Appropriations Committee,
76-304 -94 -7
for research projects on ways tx) transition into other ways to make
a living in rural areas other than tobacco. It isn't easy.
Mr. Levin. OK We are worried about economic dislocation in
this country of all kinds. Maybe we should add on to the tax and
address this issue seriously.
I don't like to see people coming before us, including colleagues,
arguing on an economic basis when the implication is that it is nec-
essary for the economic prosperity in a certain area to grow some-
thing that kills people.
Smoking is for a lot of people, as we know, a health nuclear
bomb. And it is for those of us who aren't smoking but have to help
pay the bills. So maybe it is time for us, in addition to all of these
other measures, including discouraging people from smoking, to
take a really hard look to begin to act on the economic nexus here
in part because the companies are turning, as we know, to Third
And I think we want to somewhat move on this economic disloca-
tion issue as well as the other things. And I congratulate you. I
personally have no doubt but there will be a cigarette tax in any
health reform bill.
Chairman ROSTENKOWSKI. Are there any further questions of Mr.
Durbin and Mr. Markey?
Mr. Payne. Thank you very much, Mr. Chairman. And thank you
both for your testimony.
Mr. Durbin, you mentioned what we are about here today is
keeping kids from smoking, and while it is a laudatory goal, what
we need to do right here today on the Ways and Means Committee
is to decide the appropriate way to finance health care.
It has been said a number of times that $24 billion is the number
that we should be looking at. Apparently OTA recently did a study
that said that smokers' costs to the Federal, State and local govern-
ments is $8.9 billion in health care expenditures that are attrib-
utable to smoking related illnesses, and already in terms of the
taxes that are paid at the Federal, local, and State level, are about
$11.3 billion in excise taxes and another $2 billion in sales taxes
or $13.3 billion, which would say that the amount of taxes being
collected exceeds that amount that OTA recently found that were
attributed to the treasury of the Federal, State and local govern-
But what we need to do today is to talk about the economic im-
pact of whatever means has been chosen to finance health care.
The concern that I have, and other Members who will testify who
are from areas that grow tobacco, is that when the tax being pro-
posed is a tax increase on cigarettes of over 300 percent, on chew-
ing tobacco of over 10,000 percent, these taxes exceed what are rea-
sonable increases and affect certain regions of the country in ways
that are much greater than other regions and have a severe eco-
nomic impact, negative economic impact, on our regions.
And we need to continue to talk about that, keep that message
here, because it is an important consideration, I think, for this
committee as we deliberate about what is the appropriate method
of financing our health care reform. So I didn't want this oppor-
tunity to pass without having the opportunity to comment on that.
And thank you very much for your testimony.
Chairman ROSTENKOWSKI. Mr. Ford.
Mr. Ford. Thank you, Mr. Chairman. I will be very brief.
Picking back up on that conversation, you know, we are here try-
ing to figure out the financing of the national health care plan.
Those 13- and 14-year-olds see all of this $10 billion per year in
advertising coming from the tobacco companies. The same is true
with these teenagers 13 and 14 and 15 years old, participating in
homicides and shootups, which is really impacting the cost of
health care in this country.
And our President mentioned this problem last weekend and
showed the correlation between guns and ammunition and health
care costs. And as we focus on tne financial aspect of this health
care package, I mean, are you looking to broaden that base beyond
tobacco? I naturally include ammunition under the sin taxes. There
is talk that distilled spirits create a problem as well for the health
care costs. And while speaking of distilled spirits, wine and beer
should be discussed, if we are going to address all possible areas
for financing this health care reiorm package.
Mr. Markey. Harold, if I could, as astounding as this may seem,
more people die from smoking-related diseases each year than all
alcohol-related, illegal drug-related, homicide and suicide deaths
combined. All of it combined doesn't equal the number of deaths
from smoking-related diseases in a year.
Mr. Ford. What is the number of deaths due to smoking-related
cancers per year, what is the number?
Mr. Markey. The number is over 400,000 now.
Mr. Ford. Well, there were 37,000 homicides last year in this
Mr. Markey. Sorry, it is more than 400,000 from all smoking-
related diseases. It is estimated that 85 percent of the lung cancer
cases in men and 75 percent of all the lung cancer cases in women
are related to smoking. So it is iust a huge number.
So, yes, I think that each or us would support looking at taxes
on guns or ammunition, alcohol, some of those other areas. But as
a public health hazard, there is no question that all of them com-
bined in terms of what we can do in one decision, is dwarfed by
Mr. DURBIN. I know by the President's visit to your hometown
and his focus on crime and its impact on young people that you
have a personal concern, as we all do, on what is happening to kids
out there. I am with you. If you want to put together a package
that addresses tobacco, alcohol, the senseless killing that is going
on, I am with you.
We really have a responsibility to do something about it. And I
don't want to stop and just say I am going to pick on tobacco and
leave everything else alone. If we can put together a reasonable, ra-
tional approach to this, I will be glad to sit and work with you on
Mr. Ford. Thank you very much.
Chairman Rostenkowski. Any further questions? Thank you
very much, gentlemen.
STATEMENT OF HON. H. MARTIN LANCASTER, A REPRESENTA-
TIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Mr. Lancaster. Mr. Chairman and members of the committee,
thank you for the opportunity to testify today.
The President's health care proposal is not fair to my people and
my region. The President wishes to raise two-thirds of the needed
revenue for health care reform by increasing the Federal excise tax
on cigarettes by 300 percent, from 24 cents a pack to 99 cents a
Because tobacco is grown in a few southern States, the economic
dislocations inflicted by this punitive tax increase will fall only in
selected areas of the Nation, and these are the very areas least
able to bear them.
This issue is a personal one with me, because I grew up on a to-
bacco farm in rural North Carolina. I know about the decent, hard-
working people in my State whose livelihoods are dependent on to-
bacco. My opposition to this unfair and punitive tax is on their be-
In my State of North Carolina, almost 55,000 farms have tobacco
allotments. There are 99,000 jobs directly attributable to tobacco.
That doesn't count the thousands of merchants, service providers
and others who benefit economically from the wealth generated by
tobacco. We estimate in excess of 250,000 jobs in these related
areas. The total economic value of the tobacco industry in my State
is $7.3 billion annually.
People can quibble as to exactly how many of these jobs will be
lost and how much our economy will be damaged because of this
excise tax increase, but common sense tells us that there will be
a staggering "hit" on North Carolina's economy, particularly in
We must remember that nationwide there are 1.6 million jobs in,
or created by, the tobacco industry. Americans who hold these jobs
are honest and hard working, with dignity and pride. Many of
these high-paying, high-tech, nigh-productivity jobs cannot be re-
placed by any amount of crop diversification or job retraining pro-
grams. Economists project that job losses in the South would be 3.5
times higher than in the rest of the country combined if this tax
In short, it simply is not fair to ask my constituents to suffer the
economic damage that will be inflicted on them by singling out this
particular industry for punitive taxation.
It is not as if tobacco were getting off taxation scot-free. Last
year, as Mr. Andrews pointed out, the tobacco industry paid in ex-
cess of $14 billion in Federal and State excise taxes on cigarettes.
These are taxes that nonsmokers do not pay. And they have risen
dramatically in the past decade. In fact, excise taxes have risen on
the Federal level by 50 percent since 1991 â€” ^most recently, in Janu-
ary 1993 â€” and by 133 percent in the last 10 years, while the aver-
age State cigarette tax excise taxes have simultaneously increased
by another 100 percent.
While my focus is primarily on the proposed cigarette tax, let me
take a moment to mention the incredible tax increases proposed for
smokeless tobacco and other tobacco items. In some cases, the tax
increase proposed is over 10,000 percent. This would be ludicrous
if it were not so serious. Such an outrageous tax increase would
certainly price these products totally out of the reach of consumers
and destroy this aspect of the industry.
Those who argue for the tobacco tax seek to justify it by citing
the health care costs associated with tobacco use. I am not here to
say that there are no economic costs associated with smoking, al-
though I really do question the validity of some of the speculative
figures that we have heard this morning.
If you accept this rationale for imposing higher taxes, how can
we single out tobacco without looking for revenue on other items
or behaviors that raise health care costs? Specifically, why are we
not asking for a financial contribution from alcohol?
The Alcohol, Drug Abuse and Mental Health Administration esti-
mates that alcohol abuse cost the United States $85.5 billion in
1988. Each year, more than 100,000 deaths are directly attrib-
utable to alcohol abuse. Alcohol is a contributing factor in even
more deaths, with almost half of all homicides, suicides and motor
vehicle fatalities being related to alcohol use.
Prenatal alcohol exposure is one of the leading causes of mental
retardation. Fetal alcohol syndrome costs the Nation $1.8 billion
each year. Countless spouses and children are psychologically and
physically abused every year by alcoholic family Members, often re-
sulting in significant health care costs.
It perplexes me that we have before us legislation today that
fails to ask that alcohol share the burden of taxation for health
care reform. Is the alcohol lobby that powerful? Does the fact that
more Americans drink than smoke explain this lack of rationality
and fairness? I made universal health care my top priority well be-
fore the Clinton administration ever considered it. Four years ago,
I held the first rural health care conference in any congressional
district that we know of. It will hurt to do so, but other tobacco rep-
resentatives and I will do everything we can to defeat any health
care reform package that singles out tobacco for a confiscatory tax
and does not fairly spread the burden across other viable revenue
No single product, industry, State or region can or should be tar-
geted to bear all the costs of health care reform. That sort of fi-
nancing scheme is a recipe for failure. The costs of health care are
growing. Revenues that can be counted on from cigarettes are
If opponents of tobacco have their way, this tax will significantly
reduce tobacco consumption if not kill the industry altogether.
What will we then tax if we have killed the goose that laid the
golden egg? This will be like building a house on quicksand.
Simple fairness demands that Congress spread the financial cost
of health care reform to all citizens and all regions of the country.
The President's plan flunks the fairness test. It places the entire
burden on my people and my region, and we simply cannot bear
Mr. Rangel. Mr. Clybum, we welcome your testimony.
STATEMENT OF HON. JAMES E. CLYBURN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Mr. Clyburn, Thank you, Mr. Chairman, I thank the members
of the committee, and thank you for the opportunity to appear
today concerning the proposed increase in Federal excise taxes on
tobacco products. I speak as one who fully supports the efforts on
the part of the administration and on the part of my colleagues to
address the health care problems of our Nation.
I speak especially for those Americans whose income levels have
denied them adequate health care and whose impoverished living
conditions have deprived them of full economic opportunities.
The question I raise today, however, is this: Do we solve the
problems caused by povertv in America by creating more poverty?
It may be one thing to look at this proposal in terms of corporate
giants and a tobacco industry which can produce $65 million in
revenues to support health care proposals. It is quite another thing
to travel the back roads of the Sixth District in South Carolina and
see the families who are dependent upon tobacco farming to eke
out their living.
Tobacco growing is one of the last outposts of family farming in
our part of the country. It is a crop which can be grown comfortably
on small acreage by people who live on the land and not by cynics
headquartered in the cities of America.
Our former Surgeon General, C. Everett Koop, has been quoted
as saying, "Most tobacco farmers know the right thing and the
smart thing to do is get out of the business that produces disease,
disability, and death.
To Dr. Koop, whose work I have respected for years, I have two
One, tobacco farmers should be asked to abandon their business
only as we ask others to abandon their livelihood and operations
such as the liquor business, the livestock business, the firearms
and munition business, the business of producing and operating the
internal combustion engine and other activities which some feel di-
rectly or indirectly lead to disease, disability and death in our Na-
The tobacco industry is being singled out unfairly and unreason-
ably. The burden of paying for America's poor health should be
shared and should not be concentrated on an industry which can
least afford to absorb it. So the issue really comes or goes beyond
public health or taxation. It goes to the issue of fairness and eq-
uity, and it goes to the core of an entire way of life in our part of
These have not been easy times for my section of South Carolina.
Four years ago Hurricane Hugo ripped apart the land and the
homes of the citizens of the Sixth District. Only months ago an eco-
nomic hurricane swept across the same area with the decision to
close the naval shipyard down, along with four military installa-
tions in Charleston, and tens of thousands of jobs were scheduled
for termination, many of them held by citizens who live all across
the eastern part of South Carolina.
And now comes the piece of legislation whose economic damage
is targeted for exactly the same area. The tobacco farmers of South
Carolina may not be numerous in comparison with workers in
other industries across the Nation. They may not represent what
might be considered a powerful lobby in the halls of Congress.
They number only in the thousands and their success or failure
may not be of immediate concern to the large city-State interests
of this Nation. But I can tell you this. Indifference to the plight of
the small farmers and the small town merchants is what has filled
this Nation's inner cities with desperate people.
Destruction of the family farmer in South Carolina may only be
a blip on the computer screen of the Wall Street financier, but it
is a matter of survival for an entire way of life in our State. To-
bacco is just not the largest cash crop in South Carolina. It is the
largest by far. It generates almost $200 million per year. After that
is cotton at around $80 million, tomatoes at around $58 million,
and peaches at around $42 million. Corn and grains by comparison
only generate around $60 million between them.
So you can see that you are not just dealing with a segment of
our farm economy, you are dealing with a huge component of it.
Please do not address this piece of legislation with any kind of
misunderstanding about its impact. It will be utterly devastating
to the economy of a State which has already been devastated in re-
cent months and years. In my district, where poverty is no strang-
er, it would only deepen the wounds which have been there for gen-
To those of vou struggling with the enormous job of trying to find