Senate OKs tax on some foods to balance budget

The Senate approved a $5.5 billion state budget early Sunday that's balanced by reinstating New Mexico's sales tax on certain foods and increasing the cigarette tax.
The food tax will generate $138 million, but it's expected to run into strong opposition in the House.
The Senate voted 23-19 to impose the gross receipts tax on a wide range of food products, including white flour tortillas, hard taco shells, candy and soft drinks.
New Mexico lifted its tax on food in 2005. The Senate proposal narrows the definition of food. It leaves products tax free if they are considered food under the federal Women, Infants and Children program. Supporters said it will encourage New Mexicans to eat healthier foods and could help reduce obesity.
"It is in effect a tax on salt, on sugar, on white flour and prepared foods," said Sen. Dede Feldman, D-Albuquerque.
The Senate approved tax measures to generate more than $180 million to balance next year's budget for public schools, colleges and government programs, including health care for the needy. The Senate worked past midnight to finish work on the budget, which passed 25-17.
Senate leaders fine-tuned the financial package Saturday to line up enough votes in the fractured chamber to pass the budget package, which relied on politically painful tax increases and spending cuts for education and governmental services.
The Senate approved:
u A House-passed measure generating nearly $16 million by expanding tax withholding requirements on partnerships and certain small corporations. The goal is to improve tax compliance by out-of-state residents. It passed 40-1.
u An increase in the tax on cigarettes by $1 a package to generate $33 million. New Mexico currently imposes a 91-cent tax on a pack of cigarettes. With the proposed increase, only 15 states would levy a higher cigarette tax. The bill passed 24-18 and was sent to the House.
With the revenues from the cigarette tax, the Senate dropped a proposal that would have cut the take-home pay of state workers and educators by requiring them to increase their pension contributions.
Public employee and educational unions opposed the higher pension payments, which would have lowered contributions by governmental employers by $27 million and increased employee contributions by a similar amount.
The Senate-passed budget will lower spending by about 3 percent next year from what public education, courts, colleges and state agencies were provided this year. The upcoming 2011 budget year starts in July.
"We've tried to spread this pain but we can't cover all of our bases," said Sen. John Arthur Smith, a Deming Democrat and chairman of the committee that developed the budget. "This is not a fun job, but we have to have a balanced budget."
With the Legislature scheduled to adjourn Thursday, the House and Senate will have little time to negotiate a a compromise budget and tax package.
A House-passed budget would cut total spending on education and government programs by about 1 percent next year. The House has approved $300 million in tax increases, including an upper-income surtax and a half-cent sales tax increase, to balance its budget proposal.
A special legislative session will be required later this year if the House and Senate fail to agree on a budget — as well as tax increases to balance the spending plan — before adjourning.
"That's the worst case scenario for us," said Smith.

Lorillard to Enter Market for Moist Smokeless Tobacco

Newport cigarette maker Lorillard Inc. announced Monday it will soon enter the market for moist smokeless tobacco products, but said that an earlier joint venture with Swedish Match AB to develop a new product in the U.S. had been mutually terminated.

Moist smokeless tobacco is a type of tobacco product that is popular in the U.S. and widely sold by companies like Altria Group Inc. through brands like Copenhagen and Skoal. Sales of these smokeless tobacco products have risen in the U.S. even as cigarette sales have dropped.

Lorillard didn't provide details of the new moist smokeless tobacco product it will sell in the U.S. but said that an existing joint venture with Swedish Match to develop a new "snus" tobacco product for the U.S. had been terminated. Snus is a nearly 200-year-old Swedish product. In 2006 Lorillard entered into a joint venture with Swedish Match North America to develop and study the possibility of marketing a tobacco product for the U.S. market called Triumph Snus.

Snus differs from most smokeless tobacco products in the U.S. as it is created through a special pasteurization process. It comes in small pouches and doesn't require spitting. On a conference call, Lorillard said the snus product didn't make gains in the test markets in the U.S. and that it may not have been the right time for the product in North America. Lorillard appears to be betting that Americans will continue to lean toward traditional formulations like moist smokeless tobacco, as opposed to newer forms they are less familiar with.

Other companies are still saying they believe snus has a future in the U.S. Altria and Reynolds American Inc. have launched snus products, but sales of these products have generally stayed relatively small. Both these companies, however, say they are expanding the reach of their snus products.

A spokesman for Reynolds American, David Howard, said the company has been very pleased with sales of its Camel Snus product and believes that it is a "viable" product. The company rolled out Camel Snus nationwide in the first quarter of 2009 after putting it in test markets for almost three years. "It's a small market but we believe there is potential growth for that market," Howard said. An Altria spokesman, Brendan McCormick, said the company is pleased with the results of its Marlboro Snus product in test markets and will be expanding it nationally at the end of March.

Swedish Match sells its flagship snus brand General in the U.S. as well as another brand called Catch. These were sold outside of the Lorillard joint venture and will continue to be sold here. Swedish Match will also continue selling the moist smokeless tobacco products, such as its Red Man and Timberwolf brands, it already sells in the U.S.

"We remain committed to the U.S. market," Lars Dahlgren, chief executive of Swedish Match said in an email statement. The company says the dissolution of the Lorillard joint venture has no bearing on its snus joint venture company with Philip Morris International Inc. That venture aims to distribute snus products outside of the U.S. and Scandinavia.

Lorillard's fourth-quarter earnings fell 6.2% on declining volume and increased manufacturing and marketing costs, though sales rose with the help of higher prices.

Lorillard dominates the market for menthol cigarettes. Lorillard's Newport brand represents the bulk of its U.S. sales, and its U.S. volume fell 6.5% during the quarter, though its U.S. market share rose to 10.32% from 9.86%.

Overall, the U.S. cigarette industry has seen volumes drop amid higher taxes and bans on smoking in public places. But Lorillard has held up better since its Newport brand has been able to grow its market share.

Smoking decline hits tax revenues

The good news is Hawaii residents are buying fewer cigarettes. The bad news is that the drop is hurting tax revenues.
According to tax collection records, island consumers bought 417 million packs of cigarettes during the first 10 months of the year, a 12 percent drop from the same 10-month period last year.The decline comes as officials hoped recent tobacco-related tax hikes would generate nearly $47 million in added revenue over two years to help balance the state's budget.
Higher tobacco taxes are aimed at driving down demand while increasing income for the state.

SoCal man gets death penalty for double murder

A judge has sentenced a Southern California man to death for the execution-style slayings of two liquor store clerks during a robbery in 2006.
Jean Pierre Rices, 27, was sentenced Friday after a jury recommended capital punishment in June.
Rices pleaded guilty to murdering Heather Mattia, 22, and Firas Eiso, 23, in 2006 as the two were closing shop at Granada Liquor in El Cajon.
An accomplice, Anthony James Miller, had packed cigarettes and $1,250 in cash into a bag before Rices shot them in the head.
Rices had prior convictions for selling drugs, robbing banks and carjacking.

Customs officers detain over 11 500 boxes smuggling cigarettes

Customs officers from mobile group for control and monitoring of General Toshevo checkpoint have seized 11 540 undeclared boxes of cigarettes of different brands with Ukrainian excise label. The smuggled cigarettes have been seized after a check of a suspicious mini-bus with Ukrainian license plate while entering the state. The shipment has been seized. The authorities drew up a statement of customs violation.

Capitol Hill tries to eliminate cigarette butts

Cigarette butts — the most-littered item in America — will soon become more scarce in the Capitol Hill area.

For the first time, the Capitol Hill Business Improvement District linked up with the Keep America Beautiful Cigarette Litter Prevention Program to help clear out tossed-away cigarettes left behind by smokers.

Three high-traffic areas on Capitol Hill were picked: the southeast corner of Eighth Street and Pennsylvania Avenue SE; on First Street SE in front of Bullfeathers and Tortilla Coast; and on the south side of Pennsylvania Avenue between Third and Fourth streets SE.

In 2008, nearly 200 communities reported an average 46 percent reduction in littered butts as a result of implementing the program.

"Cigarette litter is not only unsightly and costly to clean up, but also harmful to waterways and wildlife. Simple actions like installing ash receptacles and distributing pocket ashtrays will make a big difference in decreasing litter and ultimately keeping Capitol Hill beautiful," said Patty Brosmer, BID president.

The nonprofit Keep America Beautiful has field-tested and expanded the Cigarette Litter Prevention Program for the last six years with support from Philip Morris USA, an Altria company.

Limit smokers buying cigarettes abroad, says chief medical officer

Anti-smoking campaigns are being undermined by "ridiculous" European Union rules allowing British travellers to bring back 3,200 cheap cigarettes from member states, the chief medical officer, Sir Liam Donaldson, said yesterday.
Ministers should use next year's review of tobacco tax laws to impose a limit of 200 cigarettes or 250g of hand-rolling tobacco to tackle legal shopping and the burgeoning criminal trade in smuggled and counterfeit goods, he said.
Sir Liam, bemoaning the fact that 106,000 Britons still die each year from smoking-related causes, said: "Tobacco is a lethal product. It kills more people than anything else, yet by the pattern of price and regulation that is in place, death is made cheaper.
"For example, a holidaymaker going to Spain, can quite legally bring back into this country 160 packs [of 20 cigarettes].
"If they are a smoker that is enough to keep them going for six months and, given cheap flights and the opportunity to have a holiday along the way, it also gives quite a cost saving."
The price of a pack of popular cigarettes in Spain was £1.36, the equivalent in Britain was £4.89, and just two trips a year would save a smoker more than £1,000 in tax and duty.
"As well as a ready source for personal consumption, the temptation to sell on large amounts can prove hard to resist," he said.
The illicit street price for cigarettes in Britain was £2.50, and about a quarter of all cigarettes smoked here, and three-quarters of roll-ups, avoided UK tax and duties - either legally or illegally. This meant that government policies of raising prices - 10% increases traditionally brought 4% cuts in consumption - were being eroded.
Sir Liam, presenting his annual report on the state of public health, said the EU should insist on higher minimum prices for tobacco by fixing levels of duty and questioning "the illogical and health-damaging shopping allowance for tobacco ... It is quite ridiculous we have a limit of 3,200 cigarettes. It ought to be 200 in my view."
He also pressed ministers to follow the lead of Ireland, Sweden, Italy, Malta, some states and cities in the US and soon Scotland by having smoke-free public places and workplaces.
Cancer Research UK welcomed Sir Liam's attacks on low-price cigarettes, but Forest, the smokers' lobby group, condemned them.
Forest's director, Simon Clark, said a reduction in the number of cigarettes people could legally bring in would be "illiberal and impractical" and would "almost certainly see a return to the bad old days when ordinary cross-Channel shoppers found themselves routinely harassed and intimidated by over-zealous Customs officers".
Sir Liam, in a wide-ranging review, criticised some hospitals for failing to act speedily and comprehensively to safety alerts demanding changes in equipment and procedures. NHS trusts that have claimed to have complied with the rules had been found subsequently not to have done so.
"The NHS has not yet fully embraced the culture of patient safety," he said, adding that managers and other staff were "not wilfully bad people".
Sir Liam also called for the debate on school meals to spread to catering in hospitals, prisons, the armed forces and meals-on-wheels. The public sector as a whole served more than 1.8bn meals a year. "They need to be healthier and more nutritionally balanced. The public sector should use its huge financial muscle to improve the nation's health."
National standards were also required to improve the treatment of chronic obstructive pulmonary disease, a respiratory illness which killed 30,000 Britons each year.
The report showed continuing concern about strains of E coli infections resistant to antibiotics that have caused several deaths and much severe illness through urinary tract infections and blood poisoning.