DEMOCRATS SAY CIGARETTE-TAX BILL CAN PASS

WASHINGTON - President Clinton would sign a bill that raises cigarette
taxes by $1.50 a pack over three years if it also met other anti-smoking
goals, senior Senate Democrats say.

"I think they will clearly accept $1.50 if we can get it done," Senate
Minority Leader Tom Daschle said after a meeting yesterday with Erskine
Bowles, the White House chief of staff.

The warm reception infuriated tobacco-state Democrats, who said the
increased tobacco tax, approved on a 10-9 vote yesterday by the Senate
Finance Committee, would hurt farmers.

The tax proposal will be offered on the Senate floor as an amendment to a
comprehensive tobacco bill sponsored by Senate Commerce Committee Chairman
John McCain, R-Ariz. McCain's bill, set for debate Monday, had proposed
raising cigarette taxes $1.10 over three years as a way of reducing teen
smoking.

Several Republicans opposed the increase because it would run counter to
the GOP's lower-taxes-smaller-government campaign message. Making matters
worse, these Republicans said, was the panel's 12-7 rejection of a $65
billion tax cut for self-employed workers.

"I want to kill this bill," said Assistant Majority Leader Don Nickles, a
panel member.

The debate on the McCain bill promised to be fierce. Opponents were
expected to try to block it, but Daschle said he had the 60 votes required
to stop a filibuster.

McCain's bill would charge tobacco companies at least $516 billion over 25
years, raise the price of cigarettes by $1.10 a pack over five years and
approve vast powers for the Food and Drug Administration. Rather than grant
the industry immunity from most lawsuits, as companies have demanded, the
bill would cap legal damages paid by the industry at $6.5 billion annually.

For his part, McCain said last night that he was negotiating with the White
House to toughen parts of the bill, including raising the liability cap to
$8 billion a year.

Government analysts have said the bill would cost the tobacco industry as
much as $840 billion. Wall Street analysts, the industry and some senators
have warned that raising cigarette prices by $1.10 would spawn a black
market that would drive the industry out of business.

The $1.50 tax would achieve the 60 percent reduction in youth smoking
targeted by the McCain bill, said the measure's sponsor, Sen. Kent Conrad,
D-N.D. It was unclear whether the change in price would significantly alter
the industry's ultimate price tag.

Opponents said the increase would be paid overwhelmingly by working-class
Americans who smoke. Republicans have cited studies showing that 3 percent
of all cigarettes sold are sold to children.