SENATE KILLS HIGHER TAX ON CIGARETTES OF $1.50 A PACK

WASHINGTON--Public health groups on Wednesday lost a bid to raise the price
tag on sweeping tobacco control legislation when the Senate killed a
proposal to raise cigarette taxes by $1.50 per pack--40 cents above the
amount sought by the bill's sponsor.

In the 58-40 vote, 45 Republicans joined 13 Democrats in defeating the
amendment by Sen. Edward M. Kennedy (D-Mass.) to raise the cigarette tax by
the higher amount as a way to discourage teen smoking, reimburse health care
costs and fund anti-smoking programs.

The vote appeared to set the upper limit of any tobacco tax likely to pass
Congress this year at $1.10 per pack, as originally proposed in the bill
sponsored by Sen. John McCain (R-Ariz.) and supported by the White House.
California's Democratic senators split on the $1.50 proposal--Barbara Boxer
supported it while Dianne Feinstein voted against it.

In another important vote that signaled broad support for the legislation,
senators soundly defeated, 72 to 26, a proposal by Sen. John Ashcroft
(R-Mo.) to strip the measure of any tax increase. Under the McCain bill,
part of the new taxes would provide federal public health and medical
research programs with nearly $30 billion over the next five years. Even
more money would go to the states, in part to pay for anti-smoking programs.

Both Boxer and Feinstein opposed the proposal by Ashcroft, a conservative
who wants to kill the bill. Only Republicans--less than half of the Senate
GOP membership--backed his amendment, indicating that there is enough
bipartisan backing to pass a major tobacco bill this year. However,
lobbyists and lawmakers said that showdowns expected today and Friday in the
Senate over aid to tobacco farmers and legal protections for the tobacco
industry could still derail the legislation.

President Clinton weighed in in opposition to an amendment to wipe out the
bill's major legal protection for tobacco companies--an $8-billion cap on
the amount of damages that cigarette manufacturers would have to pay in any
one year. Given that the bill is considerably tougher than a proposed
settlement negotiated by the industry last year, supporters--including
Clinton--said that without getting some benefit, tobacco companies can be
expected to file legal challenges and delay implementation for years.

In a letter to Senate Majority Leader Trent Lott (R-Miss.), Clinton said
that he opposed the amendment to eliminate the cap, offered by Sens. Judd
Gregg (R-N.H.) and Patrick J. Leahy, (D-Vt.).

"If a cap that doesn't prevent anybody from suing the companies and getting
whatever damages a jury awards will get tobacco companies to stop marketing
cigarettes to kids, it is well worth it for the American people," said
Clinton.

The Kennedy amendment to hike cigarette taxes by $1.50 a pack was backed by
many health experts and anti-smoking groups, who argued that such a sharp
increase is the best way to discourage smoking, particularly among
price-sensitive teens. But opponents condemned the increase as a highly
regressive tax on blue-collar workers and the poor, who dominate the ranks
of smokers.

Cigarettes now cost about $2 a pack, so the proposed $1.10 increase would
raise the price at least 50%--although at that level U.S. cigarette taxes
would still be lower than in other industrial countries.

McCain's Commerce Committee originally had passed a bill containing the
$1.10 price increase. But the Finance Committee, which also had jurisdiction
over the legislation, changed the bill to include a $1.50 tax increase. The
Senate leadership dropped the tax increase Monday, reverting to the McCain
plan when the chamber began debating the bill.

Support for the Kennedy amendment among Democrats was less than unanimous,
in part because the White House had agreed to support the $1.10 level and
lobbied against any increase.

Checked-by: "Rolf Ernst"