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Ad Valorem, Ad Veritas May 24, 2007

Posted by fitsnews in SC Politics.
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smokeless tobacco

HIGH-END SNUFF PRODUCERS MANIPULATING CIGARETTE TAX BILL FOR CORPORATE MARKET GRAB

FITSNews – May 24, 2007 – There’s just something we like about the terms “ad valorem” (by value) and “ad veritas” (by truth). Of course, we’re also partial to the term “snuff,” which in addition to being what Southerners say right before their beer glasses overflow also happens to be the universally-accepted phraseology for smokeless tobacco. Well, snuff and “dip,” which is another term we’re particularly fond of. Especially if it’s preceded by the word “skinny.”

More importantly, we’re big on “fairness” and “market forces” here at FITSNews – two things which would go completely up in smoke under a proposed smokeless tobacco amendment to the cigarette tax increase.

In a brazen and not at all transparent effort to corner the market on smokeless tobacco products in the Palmetto State, United States Smokeless Tobacco is attempting to exploit the state’s pending cigarette tax bill to jack tax rates on its low cost competitors by as much as 300% – all while reducing the future tax burden on its own premium smokeless products.

True, this corporate power play may seem like small potatoes compared to the broader non-competitiveness and lack of fairness inherent in our state’s antiquated tax code, but it’s a perfect example of why our system has gotten so out of whack in the first place.

Simply put, why should politicians allow the status of U.S. Smokeless Tobacco’s market share to dictate state tax law? And why should people who purchase cheaper smokeless tobaccos be forced to subsidize the habit of those who can afford the company’s more expensive brands of snuff?

And incidentally, isn’t Sen. Hugh Leatherman always complaining about how somebody who buys a Yugo in South Carolina ends up paying the same sales tax as someone who buys a Bentley? He’s said repeatedly that he believes you should pay that tax on the actual price, not an artificial cap.

How is this any different?

Unlike South Carolina’s cigarette tax, which has remained at seven cents a pack through three decades of inflation, smokeless tobacco in our state is currently taxed ad valorem, or by its actual value. If cigarettes were taxed on an ad valorem basis, the current tax per pack would be about 27 cents – which means we probably wouldn’t be sitting here debating a tax increase to begin with. Not to mention the fact that cigarette tax revenues in South Carolina would have grown steadily in the intervening years, just as snuff tax revenues have done.

But instead, we’re now about to add “Bubba the Dipper” to the list of people the General Assembly is pissing off with this bill – and for no reason other than giving the Bentley-driving businessman a break on cans of Skoal or Copenhagen.

People, this isn’t about our state’s best interests, and it sure as hell isn’t about tax equity. It’s about U.S. Smokeless Tobacco padding its market share, much like the company did this March in Iowa when it snuck an identical measure onto that state’s cigarette tax hike.

According to a press release issued by the Campaign for Tobacco-Free Kids in response to their market grab, “This change will primarily benefit U.S. Smokeless Tobacco, the principal manufacturer of premium smokeless tobacco, to the detriment of Iowa children.”

Of course it’s not like U.S. Smokeless Tobacco is trying to hide what it’s doing, as an excerpt from its December 31, 2005 filing with the U.S. Securities and Exchange Commission clearly demonstrates:

“The excise taxes on smokeless tobacco products could affect consumer preferences and have an adverse effect on the sale of the company’s product.”

Well damn. Maybe instead of manipulating government into doing its dirty work, U.S. Smokeless Tobacco should win market share the old-fashioned way, by building a better mousetrap … err, snuff can.

We need a top-to-bottom overhaul of South Carolina’s backward, anti-competitive tax code … not to mention a new legislature. What we don’t need is more of this penny-ante “tinkering around the edges” so that one company can get a market bump it hasn’t earned and doesn’t deserve.

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Comments»

1. just a pinch - May 24, 2007

If it saves me a litte bit on my “dip” then so be it. Why should low cost producers not have the same tax as UST?

I like Copenhagen. I paid $4.50 a can in La La land a few weeks ago. Then I had a friend bum 2 dips from me. That’s pretty expensive.

2. sic haters - May 24, 2007

hey sic willie isn’t brazen the same thing as not at all transparent? speaking of which what is not at all transparent and brazen is the size of your ego.

3. Bubba - May 24, 2007

How do I get the state to pass laws that make my business more money?! That’s a nice trick. Why doesn’t UST just lower its prices if they want to get more customers? Go figure some big corporation from Connecticut (figures damn Yankee’s) is trying to screw me in order to make more money… Makes me want to spit! Oh wait, I do that anyway.

4. FITSNews - May 24, 2007

Isn’t Greg Ryberg from Connecticut?

-FITSNews

5. Moderation - May 24, 2007

Will Folks in moderation is an improvement. A little bit of him goes a long way.

6. The Aiken Hornet - May 24, 2007

No, Ryberg is from Wisconsin.

He is a cheese head in more ways than one.

7. S.C. Capitol Corral for 5/24 » The Palmetto Scoop - May 24, 2007

[…] HIGH-END SNUFF PRODUCERS MANIPULATING CIGARETTE TAX BILL FOR CORPORATE MARKET GRAB [FITSNews] […]

8. Carolina Observer - May 24, 2007

It seems to me that you may have left out a few important folks…like RJ Reynolds who make Kodiak, the most expensive, but also make the cheapest, Grizzly Bear or something like that, on the market as well. Looks to me like snuff or “dip” should be taxed just like cigs, beer, wine, gas, etc.. built into the price…all at the same rate, and the customer only sees the reatil price and pays it along with the sales tax and life goes on. Hell can you imagine if our sales tax was ad valorem (like you suggest is so great).


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