Big Tobacco Tries to Put Out Small Tobacco in Texas

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Now, I'm not a fan of tobacco. I think cigarette and other tobacco products should be assigned very high sales tax – say, $7. The reason for this is not moral; it is so that the government has enough money to pay for the inevitable hospital bills that come as a result of a person's choice to pump hundreds of different poisons into his or her body at once. I think cigarette smoking should be legally confined to one's personal property and some closed-off smoking areas, and that our government should limit the amount of (addictive) toxins that can be put in cigarettes.

But I'm also opposed to corporations – any corporations – bullying our government to give them special favors. Case in point: the current battle between small and large tobacco companies in Texas.

As I explained in August, Philip Morris USA, R.J. Reynolds Tobacco Company and Lorillard Tobacco Company, three of America's largest tobacco companies, are pushing the Texas Legislature to raise taxes on small tobacco companies. These greedy companies are whining that the 1998 Texas Tobacco Settlement requiring them to pay the state extra fees is hurting their business so much that the government must raise taxes on small tobacco companies so the big ones can better compete. The reason for the lawsuit settlement? These big tobacco companies were found to have lied to consumers about the health risks in their products, which led to the vicious array of health problems coming from tobacco use – and Texas had to foot those hospital bills.

Only the most sensible settlement in the world – so why is this grotesque push by the big companies even being brought up? Last month, the Ways and Means Committee began considering the proposal…because the big tobacco companies ask for it. They've got the representatives' ears because in a lot of cases, tobacco money played a significant role in their election. And make no mistake: if the state raises taxes on these small tobacco operations, they will very likely have to close shop.

The Texas Constitution be damned, apparently. Texas Constitution Article VIII, Section 1(a) states that “Taxation shall be equal and uniform,” and 2(a) states that “All occupation taxes shall be equal and uniform upon the same class of subjects…” The state can't impose different taxes for the same type of business when the classifications have “no reasonable basis in the nature of the business classified” and “operate unequally upon subjects between which there is no real difference to justify the separate treatment of them.” This bill would violate the Equal and Uniform Clause of the Texas Constitution because the Texas Tobacco Settlement clearly meets the “other” reason requirement.

Under our state law, a new tax on the small guys that excludes the big guys is illegal. Let's hope that stops the legislature from approving it…but I sure wish we didn't have to.  

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About Author

Ben Sherman

Ben Sherman has been a BOR staff writer since 2011. A graduate of the University of Texas, Ben has worked on campaigns, in political consulting, and has written for other news outlets like Think Progress. Ben considers campaign finance reform the fundamental challenge of our time because it distorts almost every other issue in American politics.

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