NATO Fights Tobacco Tax Hikes With PACT Act

This month, NATO launched a new strategy to fight state excise tax increases on tobacco in states where lawmakers are proposing to raise cigarette and tobacco product tax rates.

The strategy focuses on educating lawmakers about the pending tax windfall that all 50 states will receive due to the passage of the federal Prevent All Cigarette Trafficking Act (PACT Act), NATO stated.

Under the PACT Act, Internet sellers are required to collect cigarette/smokeless taxes plus sales taxes, and remit them to states. In addition, the PACT Act prohibits the delivery of these tobacco products through the U.S. Mail. These regulations will significantly reduce Internet sales, NATO stated. Without the Internet's low-priced tobacco, consumers will revert to buying products at local stores -- resulting in the tax windfall to states, according to NATO.

Currently, states are losing an estimated $1.4 billion a year in state excise taxes and sales taxes on cigarettes and smokeless tobacco products sold over the Internet.

As part of NATO's new campaign to fight state tax increases, the association is sending lawmakers in select states a letter informing them of the estimated size of the tax windfall that their respective state may expect to receive as a result of the PACT Act. In some cases, NATO believes the size of the expected tax windfall is estimated to be more than the additional revenue the state might collect if the cigarette and/or smokeless tobacco rates were increased. Elsewhere, the estimated tax windfall may allow lawmakers to reduce the amount of any proposed tax increase, NATO stated.

NATO has sent letters to lawmakers in Kansas ($.55 per pack cigarette tax increase and OTP tax increase from 10 percent to 40 percent); Minnesota (taxing little cigars as cigarettes); New Hampshire (20-cent per pack cigarette tax increase); New York ($1 per pack cigarette tax increase); and South Carolina (50-cent per pack cigarette tax increase).

In other NATO news, the company received a wave of exhibitor commitments to the 2011 NATO Show, being held April 12-14, 2011, at the Rio Hotel in Las Vegas.

The latest exhibitors to sign up for the NATO Show include:

-- A&T Tobacco Imports
-- Bags of Bags
-- Bahama Mama Cigars
-- Beach Cigar Group Inc./Gurhka Cigars
-- Cheyenne International
-- DWC Enterprises
-- Global Tobacco
-- Great Midwest Tube & RYO Machines
-- International Tobacco Partners
-- Liaison Sales and Marketing
-- M & R Holdings
-- National Honey Almond
-- Rouseco
-- Tantus Tobacco

"Having a great trade show means that retailers find value in attending, and the retailers are telling manufacturers and distributors, this is the show to attend. When that happens, companies can't wait to sign up," Jim Colucci, senior vice president of sales and marketing for Altadis USA and a member of the NATO Trade Show Committee, said in a statement. "Also, these companies realize NATO has put more resources into fighting legislative battles than ever before, and helping support the trade show means more resources to fight anti-tobacco legislation. That's a big point of difference between NATO and other shows which will not be using the proceeds to fight tobacco-related legislation."

Other tobacco companies that have committed to exhibiting include:

-- Nat Sherman
-- New Image Global
-- Smokey Mountain Chew
-- Zander-Greg
-- K. K. International Corp.
-- Arango Cigar Co.
-- Carolina Tobacco
-- Dom Rey Cigar Inc./Cusano Cigars
-- Drew Estate
-- Harold Levinson Associates
-- House of Oxford
-- King Maker Marketing
-- Renegade Tobacco/House of Windsor
-- Smoker Friendly Intl.
-- U.S. Flue-Cured Tobacco Growers
-- Zippo Lighter Co.
-- Altadis USA
-- Swisher International
-- Swedish Match
-- Republic Tobacco
-- National Tobacco Co.