Tobacco bonds in MN budget come at hefty price

MINNEAPOLIS (AP) — The budget deal that ended Minnesota’s government shutdown comes with a hefty price: It relies heavily on borrowing $640 million against money from the state’s 1998 tobacco settlement, but might cost that same amount in interest — plus a substantial annual revenue loss for years to come.
Still, it allowed Democratic Gov. Mark Dayton and Republican legislative leaders to avoid $640 million in spending cuts or tax increases.
“From the Republican standpoint it is considered better than a tax increase. I would presume from the governor’s standpoint it makes money available to support critical programs,” said Tom Hanson, who was the state’s finance commissioner under former Gov. Tim Pawlenty. “The downside is it’s money that’s not going to be available in the next biennium … but the spending expectations will probably be there.”
All 50 states reached settlements with the major tobacco companies in 1998 to recover billions of dollars in costs incurred from treating smoking-related illnesses. Forty-six states signed a master agreement with the industry while Minnesota was one of four states that negotiated separate deals. Minnesota’s settlement was expected to bring the state $6.1 billion over 25 years, with payments continuing into perpetuity.
About 20 states have issued bonds backed by future tobacco settlement revenues to meet more immediate needs, according to Arturo Perez, a financial analyst with the National Conference of State Legislatures. Some states have done so more than once. This will be Minnesota’s first time, although the idea has been floated at the Capitol before, most recently in 2009 when Pawlenty was unable to get support for a tobacco bond issue.
The budget deal calls for $1.4 billion from tobacco bond proceeds and delayed payments to schools. Minnesota currently gets about $160 million a year from the cigarette makers, so it’s expected to receive about $320 million in the two-year budget period that began July 1. The loss of an as-yet unknown portion of that revenue in future budgets means lawmakers may have to find a way to plug that gap.
“They’re going to have the same debates two years from now,” Hanson predicted. “… Hopefully the economy will grow and the revenue will grow faster than the obligations for the programs.”
The special session tax bill Dayton signed Wednesday leaves it up to his finance commissioner to work out most details of how to structure the bond sale, including how long it will take to repay bondholders. The bonds won’t be guaranteed by the state.
As a general rule, said Bill Marx, a fiscal analyst for the Minnesota House of Representatives, the final cost to the taxpayers could be 150 percent to 200 percent of the bonds issued. By that math, a $640 million tobacco bond issue could cost nearly $1 billion to close to $1.3 billion.
Marx said the full costs won’t be known until the bonds are finally put out for bids, so it’s difficult to know yet what the interest rates would be. Tobacco bonds typically get slightly lower ratings from Wall Street analysts than the state gets for general obligation bonds, he said.
A week into the shutdown, Fitch Ratings cited the state’s expected reliance on one-time money for closing its budget gap when it downgraded Minnesota’s credit rating from AAA to AA+.
Perez said tobacco bond issues ground to a halt in 2008, partly due to failure of investment bank Bear Stearns Cos., which had been a leader in the field. He said it’s not clear if a sale by Illinois late last year and the Minnesota plan mark the beginning of a trend.
Illinois sold $1.5 billion worth of tobacco bonds last December, which could give Minnesota a guide. James Prichard, manager of capital markets for the Illinois Office of Management and Budget, said the bonds had an average yield of 5.6 percent. He said Illinois was careful to structure its deal more conservatively than many other states have done, to ensure bondholders can be paid if smoking rates decline faster than expected.
The amount of money the state gets under the settlement is tied to tobacco sales.
Danny McGoldrick, vice president for research at the Campaign for Tobacco-Free Kids, said it’s a bad deal for Minnesota. The group has been critical of tobacco bond issues by other states, too. It says raising tobacco taxes would have the added benefit of reducing smoking.
“You’re giving up a future revenue stream that can and should be used for what was intended from the settlement, which is to help prevent kids from smoking and encouraging smokers to quit,” McGoldrick said.

Tobacco price increase offsets New Hampshire tax cut

Some believe promises the state would increase sales by cutting the tobacco tax may turn out to be nothing more than smoke and mirrors.
As the Republican majority in the New Hampshire House fought for the tobacco tax decrease during the budget process, one of their core arguments was the tax cut would lead to more auxiliary sales and increased profits.
“We strongly believe that reducing this tax will result in more revenue, more economic growth and more tax cuts,” said House Speaker William O’Brien in a June statement about the tax cap.
The recent passing of the state budget brought the tobacco tax down from $1.78 per pack to $1.68 per pack, lowering the price of cigarettes by 10 cents a pack and $1 a carton. But that didn’t last long.
Soon after the tax cut went into effect July 1, tobacco companies raised wholesale cigarette prices, essentially leaving prices as they were before.
At Bursaw’s Pantry on Lafayette Road in Portsmouth cigarette prices remain virtually unchanged because of the price increases. Owner John Bursaw said the increases vary. Most wholesalers took back 90 percent of the savings from the tax break. Some took back 80 percent and a few took back 50 percent.
At Cabot Street Market in Portsmouth the price of cigarettes went down for three days when the tax decrease took effect, but the prices are back to where they were because of the recent price increases, according to store clerk Fred Heick.
Heick said sales on cigarettes appear to be up so far this month because the state’s prices are still cheaper than the bordering states, but customers are starting to scratch their heads about the prices.
“Because we did go down in price there have been questions about why we went up again,” Heick said.
Heick said it’s not unusual for tobacco prices to go up during the year.
According to published reports, the Altria Group raised the price of its Philip Morris USA cigarette brands 9 cents per pack, while Lorillard increased its various brands by 5 to 11 cents per back and the RJ Reynolds Company went up 9 cents per pack on their brands.
Shrinking demand was one of the reasons cited by the companies for the increase.
With the recent spike in cigarette prices on the heels of the tax decrease, some are having a hard time seeing how the state is going to increase sales.
Mike Rollo, director of government relations for the American Cancer Society, said things are exactly the same as they were before and there is no additional money in the pockets of consumers.
Rollo, a former state legislator, warned tobacco prices would increase by about 10 cents per pack when he spoke against the tax cut earlier this year. “If you’re a tobacco company, why would you leave a 10-cent profit on the table?” Rollo asked.
Rollo called claims of increasing sales from the tax cut misleading and estimates the cut will cost the state $14 million in revenues over the next two years.
“They basically gave a bailout to the tobacco companies,” he said. “They certainly didn’t help the consumer or the small-business owner.”
State Rep. Laura Pantelakos, D-Portsmouth, said cutting the tobacco tax was the wrong move in a year when so many state agencies lost funding and people lost their jobs. “It takes away a lot of money from things we could’ve funded,” she said.
She also has her doubts about how many people actually cross the borders to purchase cigarettes in New Hampshire.
Pantelakos said the fact the prices went up just as the tax cut went into effect just adds insult to injury. “If there’s going to be a savings, I want to see the customers get that savings, and that’s not going to happen with the tobacco tax decrease,” she said.
She noted a tax cut should benefit the whole population, not just a segment of it.
John Dumais, president of the New Hampshire Grocers Association, thinks New Hampshire still has an advantage. He stressed the increase from the tobacco companies is nationwide and averages 10 cents a pack and $1 a carton.
“Tobacco companies have a tradition of increasing at the wholesale level once in the winter, once in the summer,” he said. “They go up nationwide equally, so every state feels it equally.”
Therefore, New Hampshire still has a major price advantage that makes it attractive to those coming from Massachusetts or Maine, according to Dumais.
Maine’s tobacco tax is $2 per pack, Massachusetts is $2.51 per pack and Vermont went up to $2.62 a pack.
“There’s still a great advantage to coming to New Hampshire,” Dumais said. “If the tax cut hadn’t gone through, prices would’ve gone up anyways. The perception may be there’s no benefit, but there’s still substantial benefit for New Hampshire residents and out-of-state visitors.”
He said the fact the increase in tobacco prices followed New Hampshire’s tax cut is more ironic than anything.
“The tobacco companies have a long history of increasing their prices twice a year,” he said. “They didn’t think about little New Hampshire when they did it. They’re thinking about how to pay insurance, energy and packaging costs.”
New Hampshire Senate Finance Chairman Chuck Morse said the Legislature has no control over what tobacco companies do and stands by the decision to cut the tax, claiming it will generate more revenue in the long run because out-of-staters will come to New Hampshire to take advantage of the lower prices.
“The reality is prices went up everywhere,” he said. “But with the tax cut, we still have the New Hampshire advantage.”
Both Morse and Dumais believe the state’s cigarette prices help make the state a popular tourist destination, which in turn helps with taxes collected from people staying in hotels, eating meals and purchasing alcohol and lottery tickets, all of which help drive revenue in the state.
Dumais said it will be a few months before they can start to examine how that hypothesis is holding up.
By Aaron Sanborn
asanborn@seacoastonline.com

State dodges bullet on tobacco payments

CHARLESTON, W.Va. — A recent sharper-than-expected decline in smoking has caused payments to West Virginia from a national tobacco settlement to plunge by more than $10 million a year.
However, the state sold its rights to the payments in an $807 million bond issue in 2007. So the dropping payments are an issue for the bondholders, not the state.
“We’re not liable, is the bottom line,” said Administration Secretary Robert Ferguson, who is chairman of the state Tobacco Settlement Finance Authority.
As part of a 1998 settlement of a multi-state lawsuit against major cigarette manufacturers, West Virginia gets annual settlement payments from the companies, based on U.S. sales figures for their major brands of cigarettes.
At its peak, West Virginia was getting close to $80 million a year in payments from the cigarette companies.
But for the 2009-10 budget year, the payments dropped to about $66 million — and for the current budget year, which ends June 30, the payments are just over $62 million, state Director of Finance Ross Taylor told the panel on Thursday.
The authority’s financial advisor, Paul Creedon of Citigroup, said national smoking rates are declining much faster than had been projected when the settlement agreement was adopted.
At the time, experts projected about a 3 percent annual decline in cigarette sales, anticipating that smoking prevention/cessation programs and the deaths of smokers due to tobacco-related illnesses would gradually reduce demand.
The agreement also imposed severe restrictions on cigarette advertising, including banning ads and promotional materials aimed at young people.
However, instead of the slow gradual decline, Creedon said cigarette consumption nationally has nose-dived, beginning in 2009.
“In 2009 and 2010, the two more recent years available, it declined much more precipitously,” he said.
He said cigarette sales dropped 9.3 percent in 2009, and fell another 6.5 percent in 2010.
Creedon said two factors are driving the sharp decline: steep increases in federal, state, and local tobacco excise taxes, and the rapid proliferation of strict smoking bans nationwide.
In 2009, the federal excise tax on cigarettes increased 62 cents a pack to $1.01 a pack, while many states and localities also hiked cigarette taxes.
“Today, a pack of cigarettes is nearly $11 in New York City,” Creedon noted.
Meanwhile, he said that at the time of the tobacco settlement, strict smoking bans were primarily limited to large cities on the East and West coasts, with lesser restrictions elsewhere, such as designated no-smoking areas in restaurants in some localities.
“It’s now become a much more national phenomenon, with much more rapid implementation, and it has become much more severe,” Creedon said of smoking bans.
In many localities, smoking bans are now extending beyond public areas of buildings to exterior locations, including parks, sidewalks, and other public areas, as well as bans around the perimeters of building entrances.
In the peak consumption year of 1981, 640 billion cigarettes were sold in the U.S., Creedon said. When the master settlement agreement was signed in 1998, that figure had dropped to 442 billion.
In 2009, 329 billion cigarettes were sold, and sales dropped to 304 billion in 2010, he said.
Creedon said experts are unsure whether the steep decline in smoking in 2009 and 2010 was an anomaly, caused by the one-two punch of increased taxes and implementation of strict smoking bans, or is the start of a long-term trend.
“The question is, will consumption return to the core decline of 3 percent a year?” he noted.
From the state’s perspective, the only impact from a sharp drop in tobacco settlements payments is that it could take longer than originally projected to pay off the tobacco securitization bonds. The bonds were originally slated to be retired in 2029.
Once the bonds are retired, any future tobacco settlement payments will go back into state coffers.
Proceeds from the $807 million bond sale were used to shore up the severely under-funded Teachers’ Retirement System.
Critics of the bond sale argued that the state was taking a lesser amount of cash right away, and giving up the possibility of much larger payouts in the future. Even with the recent drop in tobacco settlement payments, the payments would still be more than the state gained by selling the bonds.
Created in 2007 to oversee the bond sale, the Tobacco Settlement Finance Authority meets annually to update the status of the settlement funds and the bond issue.
By Reach Phil Kabler
philk@wvgazette.com
304-348-1220.

Mexico hikes price of cigarettes

After ringing in the New Year Mexico’s smokers will face a tax increase for cigarettes, but whether this will cut down on smoking remains to be seen.

Mexicans looking to stop smoking for their New Year’s resolution will now have some new incentives.
2011 will bring a seven pesos tax increase to the cost of cigarettes, aimed at bringing in millions in additional revenue.
The increase follows another recent law mandating graphic warnings on cigarette packs about the dangers of tobacco.
Some experts fear the tax hike could give rise to more cigarette smuggling.
As for consumers, whether they’ll give up lighting up, or shell out the extra pesos, is yet to be seen.
This smoker says the graphic warnings make him think twice about grabbing that next cigarette — and he’d rather stop smoking than switch to a cheaper brand.
But others believe once a smoker, always a smoker.
Jorge Ivan, Ssmoker, Say: “Even if they increase the cigarette prices more, people will continue to consume it — even if they reach 50 pesos. People will continue to buy them because it is a vice.”
Mexico’s smokers will have to begin weighing money against habit when the law goes into effect on January 1st.

Unopened, antique cigarette packs could fetch healthy price

Sure, he used to indulge the habit, but it wasn’t the nicotine that turned Harry Kraemer into a cigarette collector.antic cigarette pack
The pretty packaging took care of that.
As a child growing up in Scranton, Pa., Kraemer, now 83, frequented the neighborhood pharmacy, where intricately designed cigarette packs filled the shelves.
“It got me so excited,” he said of his first purchases as a teenager. “They were so colorful, you know what I mean?”
Now Kraemer is ready to sell his collection of 7,178 cigarette packs, if he can find a buyer who will take the whole thing off his hands. He started collecting in earnest in the 1950s when cigarettes cost 17 cents a pack. Today, his son Steve reasons that at an average of $10 per pack, the collection could be worth $72,000.
The great unknown is whether anyone with that kind of money is willing to part with it for a 20th-century history of the cigarette.
He and his family figure someone in North Carolina, the state tobacco built, might be interested. Kraemer, who lives in a Minnesota retirement home, is working with his son Steve to help him sell the collection, a process that included a phone call to The (Raleigh) News & Observer to inquire about advertising.
And in case you were wondering, there’s a reason that Kraemer is even around to consider the auction block: He quit the Pall Malls decades ago.
Kraemer, who spent his career in banking and finance, purchased thousands of packs on his own and traded with other collectors to amass his stockpile. Some of the oldest pieces are from the 1930s, including packs of Chesterfield, Snooty and Happy Hit cigarettes. He owns a circa-1913 pack of Reynos.
Each of the packs in his collection is different.
When a manufacturer changed the packaging, Kraemer would buy one of everything to complete the set. So a new wrapper might necessitate buying kings, menthols, 100s, etc.

Range: $6 to $400

The value of an unopened pack of cigarettes can vary widely, said Clarke Stephens, who helped found the Piedmont Tobacco Memorabilia and Collector’s Club. Run-of-the-mill packs, even ones decades old, often go for less than the $10 average Steve Kraemer would like.
“It all depends on the condition,” Stephens said, noting that the market for old packs of cigarettes is just like any other that deals with antiques. And because cigarette packs were meant to be thrown away, “as far as I’m concerned, a pack that’s over 25 years old is an antique.”
Stephens, who collects sealed packs of Camel cigarettes, said his most valuable pack is a prototype manufactured prior to 1913, when Camels hit the market. He estimates its value at more than $400.
A pack of Homerun cigarettes, similar to a pack that Kraemer owns, was recently listed on eBay for $149.99. But most packs aren’t worth nearly that much.
A common pack from the early 1990s might bring $6; common brands from the 1960s might go for $8 or $10, said Stephens, who lives in Walkertown and worked 36 years, 7 months for R.J. Reynolds Tobacco Company.
Few buyers around
Harry Kraemer has long been a member of the Cigarette Pack Collectors Association, which started in the Triangle in 1976. Richard Elliott, who runs the group, thinks the Kraemers will have difficulty finding a buyer for the entire collection. The organization has about 200 members who concentrate on finding rare packs, not buying thousands of them at once.
Elliott, who lives in Kennebunk, Maine, said a collection of similar size to Kraemer’s sold about a decade ago for $30,000. The purchaser bought the collection for a museum.
Another museum purchaser bought a 10,000-piece collection in 2003 or so for about $12,000, Elliott said. He suggested that Kraemer sell the most valuable pieces in online auctions.
Stephens advised a similar method, by breaking up the packs into lots by manufacturer.
But Kraemer wants to get rid of it all. He estimates he drove 30,000 miles some years in pursuit of his hobby.
“I spent a lot of money on cigarettes,” he said.
Now he is determined to make some.
By Matt Ehlers
Charlotteobserver

Philip Morris, Reynolds rise cigarette prices, following Lorillard

GREENSBORO, N.C. — On Dec. 1, RJ Reynolds andPhilip Morris USA announced price increases on all their brands, with the cost to Cigarettes price risebuy their cigarettes rising 80 cents per carton across the board. Both pricing moves come a day after Lorillard’s 60 cents per carton increase on Newport, Kent and True went into effect.
The week started with Lorillard’s Nov. 29 announcement that its premium brands, excluding non-menthol, would increase 60 cents per carton, 6 cents per pack, effective Nov. 30. The company did not touch the price of the non-menthol brands because they were just brought to the marketplace a month ago, Bob Dannon, director of investor relations, told CSNews Online.
“We recently introduced Newport non-menthol with a special introductory price promotion,” explained Dannon. As of now, Lorillard has not set an end date for the pricing promotion. “Ultimately, the Newport non-menthol brands will be targeted as premium brands so they will be priced accordingly,” he added.
The latest pricing change follows two others the company implemented this year. The first came in February when Newport rose 45 cents per carton, Dannon said, and the second came in May when another 45 cents per carton increase went into effect. “It is something we are always looking at,” he added.
RJ Reynolds and Philip Morris USA similarly cited business reasons for making their price adjustments. All RJ Reynolds brands, including Camel and Winston, will tick up 80 cents per carton, or 8 cents per pack, a company spokesperson told CSNews Online. “Our pricing generally reflects our cost of doing business.”
Smokers of Philip Morris USA brand cigarettes, which include cigs4us.biz/marlboro-cigarette, cigs4us.biz/parliament-cigarette and Basic, will also see an 80 cent per carton increase, or 8 cents per pack. The change, which will be effective with shipments on Dec. 6, comes seven months after the company instituted another 80 cents per carton increase, a company spokesperson explained to CSNews Online.
“The company periodically evaluates the pricing strategies and looks at marketplace dynamics,” the spokesperson explained.
By Melissa Kress
Csnews

Paying More to Use Tobacco: City raising smokers' premiums

Winston-Salem workers who use tobacco will be eligible only for the city’s basic health-coverage plan.smoke cigarettes
A new city policy will try to save money by raising health-insurance premiums for municipal employees who use tobacco products, a change that has some workers upset.
Starting in January, health-insurance premiums will go up by an undetermined amount for city employees unless they take a test to prove they are tobacco-free, defined as having no nicotine in their body.
In addition, for the first time, people who smoke or use other tobacco products will be eligible only for the city’s basic health-coverage plan. They will not qualify for the city’s Basic Plus health plan, in which the city covers more costs.
Martha Wheelock, an assistant city manager, said that health-care costs are still being analyzed and the exact amount of the premium increase is not yet clear, although a preliminary figure of $20 per month was given in the city’s proposed 2010-11 budget.
Wheelock said that having tobacco users pay more for health insurance continues a trend of trying to keep down costs overall.
“We as a city have talked about smoking in particular for a number of years, at least internally, and I think we’re ultra-sensitive to the topic given where we live and the roots of our city,” she said.
The city’s projected health-care costs for 2010 are $20.9 million — up 10 percent. Winston-Salem is self-insured; BlueCross BlueShield of North Carolina administers the city’s plan.
Last year, all premiums went up 25 percent, but those who joined an expanded wellness program and took biometric tests were eligible to pay the old amount. About 80 percent to 90 percent of employees took the screening.
Wheelock said it is too early to know how much the changes planned for January will save the city. She said the city doesn’t break down its health-care costs by source, so there are no exact figures for how much smoking costs the city. But she said studies suggest that curbing smoking would be fruitful.
“The trend data shows that over time, this will save us and the employees themselves money,” she said.
Testing has found that 500, or 14 percent, of the 3,600 covered city employees and retirees use tobacco products. But because not everyone took the tests, the percentage likely is higher, Wheelock said.
With the program, Winston-Salem joins a growing number of government employers, including the state of North Carolina, in attempting to cut costs by improving employees’ health.
Under the state health plan, which also covers teachers, smokers are limited to a plan in which they pay 30 percent of medical costs, while nonsmokers or those in programs to quit pay only 20 percent of medical c osts. The plan’s smoking component is projected to save the state $13 million for the 2010-11 fiscal year.
Of North Carolina’s major cities, Winston-Salem is the only one adopting such a change, although Charlotte is considering restricting smokers to a higher-deductible plan next year.
The nicotine tests will likely be given yearly, Wheelock said, but other than that, the city hasn’t yet decided how to enforce the new policy. There are no plans for random testing for compliance, an idea considered for the state plan but discarded last month.
The city’s plan was announced in May, although rumors had gone around for months. Normally, the city makes health-coverage announcements in the fall, but Wheelock said the statement was moved up because it was likely to affect employees more than usual.
“I think we’re going to work extra hard to explain it to our employees,” Wheelock said.
The plan already has some smokers concerned. The city banned employees from smoking in city buildings two years ago, and some people said they thought the continued restrictions were unfair to smokers.
“It’s a little harder to quit than they think,” said Mickey Ferguson, a heavy-equipment operator for the streets department. Ferguson, a smoker, was among several employees who expressed reservations with the plan.
The city will again offer smoking-cessation classes to employees, and it started paying for anti-smoking aids last year.
About 50 employees took the smoking-cessation classes last year. City officials expect as many as 175 to take the classes during the 2010-11 fiscal year. Workers said that the classes have helped some people quit — but some stopped attending or saw few results.
Jeff Goins, a technician in the city’s parts department, has smoked for years, although he’s tried to quit several times. He was in the first round of classes, and they helped him kick the habit — but only for 4½ months. He said he didn’t plan on taking the classes again.
“It’s a waste of time. I know I have a problem,” he said. “I have to go with their policy, but I don’t think it’s a fair decision.”
By Sarah Morayati
Journalnow: June 15, 2010

"Nicotine Bees" Population Restored With Neonicotinoids Ban

Nicotine Bees
Following France and Germany, last year the Italian Agriculture Ministry suspended the use of a class of pesticides, nicotine-based neonicotinoids, as a “precautionary measure.” The compelling results – restored bee populations – prompted the government to uphold the ban. Yesterday, copies of the film ‘Nicotine Bees’ were delivered to the US Congress explaining the pesticide’s connection to Colony Collapse Disorder. Despite the evidence, why does CCD remain a ‘mystery’ in the US?

Nicotinyl pesticides, containing clothianidin, thiametoxam and imidacloprid, used to coat plant seeds, are released into the lymph as a permanent insecticide inside the plant. But after just sucking dew from maize leaves that absorbed neonicotinoids, disoriented bees can’t find their way to the apiary. Massive numbers of bees get lost and die.
In 2009, Italy’s neonicotinoid-free corn sowing resulted in no cases of widespread bee mortality in apiaries around the crops. This had not happened since 1999. The European Research Center, Youris, reported that Moreno Greatti, from the University of Udine stated, “Bee hives have not suffered depopulation and mortality coinciding with maize sowing this year. Beekeepers from Northern Italy and all over the country are unanimous in recognizing that the suspension of neonicotinoid- and fipronil-coated maize seeds.”
Although varroasis (infections from mites) and other pathologies are found at other times of the year, suspending neurotoxic insecticides improved the situation significantly. Francesco Panella, President of the Italian Association of Beekepers, says: “On behalf of beegrowers working in a countryside dominated by maize crops, I wrote to the Minister of Agriculture to confirm the great news, for once: thanks to the suspension of the bee-killing seed coating, the hives in the Po Valley are flourishing again.”
Not true in Southern Italy, where bee mortality was high in citrus groves, which were sprayed with neonicotinoids, also used in vineyards and other crops. The new law has been challenged by the agrochemical industry but the Italian government upheld the ban.
Want to eat?
With pollination responsible for one-third of our food supply, the loss of 30% of our bee population prompted the Pollinator Protection Campaign by the Sierra Club. It bought 333 copies of Nicotine Bees which were delivered to Congress on May 13 and 14, along with 50 more from the filmmakers, with a letter from the National Honey Bee Advisory Board. The American Beekeeping Federation and American Honey Producers Association are asking Congress to stop the threats from systemic pesticides to food supplies, honeybees and pollinators. Send a copy to the other 152 members of Congress by contacting the Sierra Club’s bee campaign.
The bees steep decline in 2005 and 2006 was catastrophic around the world. In the UK bee numbers have been halved over 20 years, with reasons including the pesticide and warmer winters due to climate change. Honeybee pollinated fruit trees and crops in Britain amount to £165m annually, so a campaign to grow bees in city gardens and roofs has been an attempt to halt decline.
Despite the scientific data, reports still claim the reason for the bee crisis is unclear, even blaming cell phones. So what’s really holding up the banning of neonicotinoids? As a beekeeper in the documentary says, “A fifth grader can figure this out”.
By Roberta Cruger
Treehugger, 05.15.10

European Union Objects to Ireland’s Intention to Establish Minimum Prices for Tobacco

The Irish Fiscal officials claim they have agreed with tobacco companies to establish minimal prices for tobacco products primarily in order to crack down the sales of low-cost cigarettes across the country. The government considers that assigning the bottom limit for retail price of a pack of 20 cigs would prevent sellers from the capability to offer particular brands at the reduced prices.
european union
However, The European Union’s Trade Commission has argued that Ireland government is not qualified to establish the minimal prices for tobacco products, including cigarettes. In case the Commission challenge against the government of Ireland, which is due to be considered during the first week of March, will win, Irish smokers could see prices on cigarettes and other tobacco items drop in the nearest future.
Back in 1995 the European Union adopted a Manufactured Tobacco Tax Directive according to which tobacco products’ retailers and manufacturers are allowed to establish the maximum prices for their merchandise. However, Ireland has its own tobacco regulations implemented in 1986 concerning marketing, promoting and advertising of tobacco products. Under those regulations, sales of cigarettes with a discount more than 3 percent of retail price are prohibited.
Irish officials state minimal prices are obligatory for protecting both smokers and non-smokers by assuring that cigarettes are selling at a relatively high price. They underline that EU Directive only concerns the maximum prices, and not the minimal ones. However, the European Commission is getting ready to declare that Ireland has violated its commitment in conformity with the 1995 directive. Similar challenges have been also announced against Austria and France.
Several months ago, Advocate General for European Union Justice Court, Juliane Kokott discovered the issue in Ireland. Though the views of the Advocate General are not mandatory, her opinion is often followed. Mrs. Kokott questioned the legitimacy of Irish law, stating that establishing minimal prices breached with the tobacco companies’ right to establish a maximum price, which should not be below than the limit established by the government. The Advocate General admitted that EU member-countries are able to raise the excise taxes on tobacco products, and that has been the effective way to lower smoking rates and protect public health.
The ruling of the Court of Justice is expected to be announced on March 4th.
According to last year’s data, the Revenue Commission generated nearly €1.22 billion in excise taxes in 2009, in comparison to €1.17 billion in 2008.
Also in tobacco-related news, Irish customs agents confiscated last week cigarettes worth nearly €12 million from a warehouse in Dublin suburbs. The illegal products were smuggled to the country in bulk pallets of timber.
The spokesman for the Irish Association of Tobacco Manufacturers claimed that cigarettes illegally imported into the country, deprived Ireland from €526 million in lost taxes in 2009. And such losses are simply inadmissible at the time of severe recession.
By Clark Moore, Staff Writer
Copyright © 2010 Tobacco-Facts.net All rights reserved.

Senecas confront tobacco roadblock

WASHINGTON — Congress may be about to put the Seneca Nation’s mail-order cigarette industry out of business.
The Senate is expected to soon consider a bill that would bar the U.S. Postal Service — which has been handling an estimated 70 percent of the Senecas’ tobacco merchandise — from delivering those cigarettes. The House passed a similar measure last May, and lawmakers and anti-smoking lobbyists talk as if the new legislation could be a done deal before long.
In other words, Albany’s long-standing quest to curb the Senecas’ sales of tax-free cigarettes may soon end successfully in Washington, leaving the Indian nation’s smoke shops as the central remaining venue for its tobacco business.
But the Senecas are putting up a last-ditch fight, contending that the bill threatens 1,000 jobs and unsuccessfully prodding New York’s senators to oppose the measure — even though they co-sponsored it.
Then again, that sort of turnabout would not be unprecedented.
Democratic Reps. Brian Higgins of Buffalo and Eric J.J. Massa of Corning recently expressed qualms about the bill, even though they voted for the House version last year.
Those qualms stem in part from the grave concerns of their Seneca constituents.
“An attack on the Seneca Nation is an attack on the economy of Western New York,” said J.C. Seneca, a successful tobacco entrepreneur who also is co-chairman of the tribe’s Foreign Relations Committee.
Considering its cigarette businesses, casinos and other enterprises, the Seneca Nation represents “a $1.1 billion economic engine” for the area, Seneca said.
“We are in the infancy of our economy,” he added. “Let us use [the tobacco trade] to build on, to diversify.”
Such aspirant words ring hollow to officials from the State of New York, as well as the anti-smoking lobby, who see the Senecas building their economy on tax evasion and sales of a an addictive carcinogenic product.

Paterson backs PACT

The state backs the proposed federal law — the Prevent All Cigarette Trafficking (PACT) Act — even though it would provide the state only an estimated $30 million a year in new tax revenue from people who would buy cigarettes at stores rather than from the Senecas by mail.
That’s far short of the $220 million the state would get if it could tax the cigarettes that the Senecas currently sell both through the U.S. mail and at their smoke shops, but it’s good enough for Gov. David A. Paterson.
“We strongly support the PACT Act,” said Morgan Hook, a spokesman for the governor. “Eliminating the ability of cigarette sellers to ship cigarettes to customers by mail is in the interest of the public health.”
The House passed its version of the PACT Act by a 397-11 margin last May.
Even though versions of the bill have been kicking around for years, congressional sources said that it was rushed onto the House calendar before the Senecas could wage a big fight — and before some lawmakers understood its ramifications.
That’s why Higgins and Massa have changed their tune.
The PACT Act “would eliminate the [Senecas’] mail-order businesses and associated employment,” Higgins wrote in a Dec. 14 letter to Democratic Sens. Charles E. Schumer and Kirsten E. Gillibrand of New York. “I do not believe that Western New York can afford any more job losses and so this letter is a request for your help in preventing that from happening.”
Asked about the letter, Higgins said it stemmed from concerns that a North Carolina senator would add language to the bill to shelter a tobacco seller in that state from the law.
“I still support the bill,” Higgins said. “My point — perhaps unclear in the letter — was, if the Senate is going to amend the bill to protect North Carolina, would they consider amending it to protect New York?”
But Senate sources said the bill’s sponsor, Sen. Herb Kohl, D-Wis., refused to grant exemptions to North Carolina or any other state. And a spokesman for Sen. Richard M. Burr, the North Carolina Republican who had sought such an exemption, said there would be no such language in the final bill.
Nevertheless, Massa — who sent Gillibrand a Dec. 16 letter urging her to prevent a quick vote on the matter — said he now opposes the PACT Act.
Massa said that his view evolved “as I became more informed” and that he now worries that the bill would infringe on the Seneca Nation’s rights established by treaty more than two centuries ago.
“It is my job to uphold federal treaties, and this is one of them,” Massa said in an interview. Richard E. Nephew, chairman of the Seneca Nation Legislative Council, echoed that concern. “It all begins with our treaty rights, which we were given by the federal government and which say that we will be undisturbed in our territory,” Nephew said. “We’ve learned to capitalize on that.”

Competitive advantage

There’s no doubt of that.
About 11.8 million cartons of stamped, legally sanctioned cigarettes flowed through the Seneca reservations in 2008, the state Department of Taxation and Finance reported.
That’s about 1,483 cartons of cigarettes for every Native American living on Seneca lands — and that doesn’t count the counterfeit or smuggled cigarettes that critics believe pass through Seneca hands on their way to smokers nationwide.
Citing the sovereignty of Indian lands, Seneca merchants refuse to collect state taxes on the cigarettes they sell, giving them a huge advantage over convenience stores and other outlets that sell tobacco products at full price. That has made Seneca smoke shops and mail-order cigarette businesses a huge success.
Seneca cigarette sales peaked at 29.8 million cartons in 2004 and have fallen sharply since then, as credit card companies and shippers such as FedEx, UPS and DHL bowed to state pressure and stopped servicing Seneca cigarette businesses.
What’s left is still a thriving business that, the Senecas say, employs 1,000 people — and relies primarily on the Postal Service to deliver its goods.
Asked to detail where those 1,000 jobs are, the tribe declined.
“Do they really expect us to fall for the canard that cigarette tax evasion is an economic-development engine?” said James S. Calvin, president of the New York Association of Convenience Stores.
Calvin and other supporters of the federal bill argue that many of the Seneca jobs would simply shift to cigarette sellers who pay taxes — and who do a better job of ensuring that tobacco products don’t get sold to minors.
Even though the Seneca businesses require a copy of the customer’s ID before shipping out cigarettes, anti-smoking advocates said it’s still far easier for kids to borrow a parent’s ID and order smokes than it is to buy them face to face. “This bill is all about making sure cigarettes don’t get in the hands of kids and that the tax revenue goes to the state,” said Russell C. Sciandra, director of the Center for a Tobacco Free New York.
The Senecas counter by insisting they are diligent on checking IDs and by stressing that they have worked with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives to crack down on cigarette trafficking.
In fact, Ronald B. Turk, the ATF’s special agent in charge for New York, lauded the Senecas’ efforts in a letter last May. “As a result of the Seneca Nation’s cooperative efforts with ATF, several investigations into illicit cigarette trafficking have been initiated and are now being prosecuted,” Turk wrote. “The assistance provided thus far has been invaluable.”
Strange bedfellows
If the Seneca Nation and the ATF seem like strange bedfellows, note this: Supporters of the PACT Act include not only the Campaign for Tobacco-Free Kids, but also Altria, the tobacco giant once known as Philip Morris. Altria is part of the Coalition to Stop Contraband Tobacco, which is lobbying for the bill’s passage — a fact that leaves the Senecas arguing that they’re in a death struggle with Big Tobacco.
“It’s all about money for Philip Morris,” said Seneca, who now manufactures his own brand of cigarettes, called Buffalo. “They’re losing market share.”
While private shippers — who have voluntarily stopped delivering the cigarettes — would still be able to legally ship them under the PACT Act, the Senecas are pressuring Schumer and Gillibrand to try to stop the bill in the Senate. But that argument appears to be getting nowhere.
Congressional aides said Kohl is seeking a way to get the measure passed quickly and to then get the House to simply repass the Senate’s slightly different version of the bill.
New York’s senators remain steadfast in their support of the PACT Act.
“Sen. Gillibrand supports the legislation because it will end illegal trafficking of cigarettes to minors,” said her spokeswoman, Bethany Lesser.
Schumer spokesman Max Young said: “We strongly believe that cigarettes should not be sold in the mail or anywhere else to children or minors.”
By Jerry Zremski, Buffalonews
January 11, 2010