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Panel waters down smokeless tobacco tax bill

by Randy Coleman

THE ASSOCIATED PRESS

CHARLESTON -- The Senate Finance Committee on Tuesday endorsed a tax on smokeless tobacco that is weaker than a similar measure pending in the House Finance Committee.

The Senate's version calls for a 7 percent tax on smokeless tobacco, cigars and pipe tobacco, the same tax the state now imposes on cigarettes.

The House bill follows Gov. Bob Wise's recommendation for a 25 percent tax.

Former Gov. Cecil Underwood proposed a similar tax measure last year which passed in the House but died in the Senate Finance Committee.

The Senate committee on Tuesday endorsed the tax after about an hour of discussion, which included a plea by state Secretary of Health and Human Resources Paul Nusbaum that lawmakers pass the bill because studies show it will deter tobacco usage teenagers.

Nusbaum said the tobacco industry is targeting young consumers with new attractive products, such as tea bags and flavored tobacco. West Virginia should make purchasing tobacco products as difficult as possible, he said.

"Price dramatically impacts usage. It's that simple. I can show you study after study," Nusbaum said.

John Hodges of the West Virginia Wholesalers Association, who also addressed the committee, said the proposed tax is not likely to stop teenage consumers from buying tobacco products. It will simply drive them across state lines.

Senators in counties that border Virginia, Kentucky and Pennsylvania have said their primary concern with the bill is that retailers would be hurt by a 25 percent tax because those states don't tax smokeless tobacco.

"Where I live, in Weirton, you can go one mile into Pennsylvania and buy smokeless tobacco that's not being taxed," said Sen. Ed Bowman, D-Hancock.

Nusbaum's lobbying for the tax was instrumental in reviving the debate over the smokeless tobacco tax, some lawmakers said.

"It's good that the Senate made this move, because it's precedent-setting," Nusbaum said.

Nusbaum said he would prefer that the percentage be higher, but "the legislative process is still going on."

Senate President Earl Ray Tomblin, D-Logan, said the tax passed by the Senate Finance Committee seems fair, because it "taxes all tobacco products, and it treats all tobacco products the same."

The bill, SB116, was amended to include other provisions not part of the House bill.

The tax would go into effect in January 2002, not July 2001 as suggested by Wise, under terms approved by the finance committee.

Unlike the House version, the Senate bill also added pipe tobacco and cigars among the items taxed and insists that wholesalers from out-of-state be required to pay West Virginia's tax.

The committee voted down a proposal by Senate Majority Leader Truman Chafin, D-Mingo, which would have exempted all retailers within a five-mile radius of Virginia, Kentucky and Maryland.

"I'm concerned about what this is going to do to our businesses in border counties," Chafin said.

"I understand this is a health issue, but it's also a business issue. We're saying we're going to be business-friendly, but we're doing things that continue to drive businesses away from the state," he said.

State tax officials estimated that a 25 percent tax would bring in about $6 million, and Wise included that amount in his proposed fiscal 2002 budget.

By adding pipe tobacco and cigars, but then dropping the tax to 7 percent, the tax would likely bring in about $2 million, said state tax analyst Mark Muchow.

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