House Repeals Tax Break for Tobacco

WASHINGTON —  In a reversal that exposes the widening cracks in a once-solid wall of support for the tobacco industry, the House voted unanimously Wednesday to rescind a recently enacted $50-billion tax break for cigarette makers.

By voice vote, lawmakers repealed a provision of last summer’s balanced-budget agreement that granted tobacco firms tax deductions of up to $50 billion to offset money paid out under the terms of a proposed national tobacco settlement.

The House vote came as part of debate on a $279-billion appropriations bill for labor, education and health and human services programs. There was no opposition to rescinding the tax break, which the Senate agreed to repeal by a 95-3 vote last week.

The Senate and House votes represent one of the most damaging political setbacks experienced by the tobacco industry in recent history. So widespread was the revulsion against the tax credit, even Republican leaders who initially supported it were sheepishly denying any involvement in placing it in the five-year budget deal that President Clinton signed into law Aug. 5.

“This is a tremendous victory over the tobacco industry,” Rep. Nita Lowey (D-N.Y.), an ardent anti-tobacco lawmaker, said in an interview after the vote. “The Republican leadership just went too far by slipping this in the budget in the dead of night. Today we showed it couldn’t stand the light of day.”

As part of the balanced-budget deal between the White House and GOP leaders, negotiators agreed to impose a 15-cent-per-pack tax on cigarettes and to earmark the expected $24 billion generated over the next five years for uninsured children’s health programs.

A 46-word provision--written by a tobacco lobbyist and inserted into the budget agreement by Senate Majority Leader Trent Lott (R-Miss.) and House Speaker Newt Gingrich (R-Ga.)--gave tobacco firms a tax break equal to the amount of money raised by the new tax. The break was designed to reduce the financial impact of a proposed $368.5-billion settlement to resolve a raft of health-related lawsuits filed by states.

The White House accepted the provision and it became part of the legislation without a public hearing or congressional debate.

Outraged by the furtive nature of the tax break, tobacco opponents voted to overturn it. Some noted the link between tobacco firms, which have been among the largest donors to congressional races, and campaign finance reform, which has been another point of political intrigue on Capitol Hill.

Hours after the tobacco vote, Rep. Lloyd Doggett (D-Texas) took the floor of the House to praise his colleagues for standing up to tobacco interests, and urged them to find similar resolve to wean themselves from the influence of large campaign donors.

“We need to have [campaign contributions] exposed in the full light of day, rather than in the back room,” he said. “Tobacco firms had given money to both Democrats and Republicans.”

* CRACKING DOWN

Clinton wants Congress to combat teen smoking. A1

* NO DONE DEAL

Outcome for sweeping tobacco bill depends on three big ifs. D1