Update: House drops consideration of surcharge on low-cost cigarettes
Were you wondering why the conference committee on tobacco issues emerged on the last day of the session? Here's one reason: Some House leaders were considering reviving the surcharge on Dosal Tobacco and other low-cost cigarettes which were not a part of the 1997 tobacco settlement agreement with Big Tobacco.
In behind the scenes negotiations on Friday, discussions included imposing a three-year 25-cent surcharge on the non-settling manufacturers like Dosal in Miami. After three years, the surcharge goes away and the companies can either lower their prices or pocket the difference.
House leaders say this morning it was an idea that has not gelled.
"The House has no plans to revive the conversation about a surcharge on low cost cigarettes,'' said House spokeswoman Jill Chamberlin. "The Speaker decided earlier this week the issue is closed in the House. As to the tobacco company bond issue, the House and Senate have said it will be considered in the negotiations, but no final decision has been reached as to the mechanics of those negotiations.''
The tobacco surchage is strongly opposed by the House's budget chiefs, Rep. Marcelo Llorente and Rep. David Rivera. Rivera stood before a crowd of Dosal employees who had been bused up to Tallahassee last Friday to protest the surcharge and promised them the House would stand firm in opposition.
We have seen no formal announcement of a conference -- as we've seen all session, until the deal is set they are not likely to operate in the open. But had heard that negotiators for the House included Finance and Tax Council Chairwoman Ellyn Bogdanoff, R-Fort Lauderdale, Rep. Gary Aubuchon, R-Cape Coral, and Rep. Erik Fresen, R-Miami.
Senate President Jeff Atwater said late Friday that the bond issue -- which would limit the amount of bonds tobacco companies must post when they want to appeal one of the 8,000 cases pending against them from sick smokers in Florida -- was added to the final week negotiations out of concern for "the health of the industry."
There is wide speculation that another reason is to offer a trade to Big Tobacco: you swallow our tax, we'll shield you from posting more than $300 million in bond cash. They would also have liked to tax the low-cost cigarettes that keep eating into their market share.
Atwater didn't acknowledge the trade but he did admit there is one more advantage to adding the issue to the extended session: to help secure the votes for the cigarette tax in the more conservative House. "We did pass a budget that does have a surcharge in it and maybe these issues should be resolved at the same time,'' he said after the session adjourned late Friday.
Was it a trade? "I never discussed it as a trade."
UPDATE: Sen. J.D. Alexander said at 9:30 Saturday, the Senate is holding firm: no Dosal tax. Rivera said the House will not pursue it.