Business

Dosal 'Tax' Is Dead, Bill Sponsor Says

After Scott's veto threat, Rep. Tobia snuffs out latest run at cigarette maker
By: Kenric Ward | Posted: April 19, 2011 3:55 AM
Close up of Cigarettes

Credit: Shutterstock - rakim

The sponsor of a bill to raise fees on Florida-based Dosal Tobacco Co. says the measure is dead -- again.

Rep. John Tobia, R-Melbourne, said Gov. Rick Scott's vow last week to veto House Bill 1207 "pretty much closes the issue this year."

Tobia's comments to Sunshine State News came less than two hours after the Florida Retail Federation reiterated its support for the bill, which would raise fees on Dosal cigarettes to bring them in line with those paid by Big Tobacco companies.

Excluded from Florida's tobacco settlement with larger cigarette makers, Dosal enjoys a price advantage because it does not pay the added fees. That has enabled Dosal to grow its market share from roughly 2 percent at the time of the settlement to nearly 20 percent today.

“The fact is, if we continue to give select manufacturers a free ride, their market share will only increase. This will ultimately lead to a market share shift based solely on government regulation," said Rick McAllister, president of the Florida Retail Federation.

"We never looked at [the legislation] as a tax increase," he added. "We just don't want to see the marketplace disturbed. It's not the government's job to pick winners and losers."

McAllister pointed to a recent Mason-Dixon poll showing that more than 70 percent of Floridians support extending the settlement assessments to so-called nonparticipating manufacturers, such as Dosal.

While McAllister and other proponents called the Dosal bill a matter of equity, the company has beaten back repeated efforts to impose the additional fee on its cigarettes.

The perennial lobbying battle has allied health advocates with Big Tobacco companies, such as Philip Morris and R.J. Reynolds against Dosal, a relatively small, homegrown cigarette maker. Both sides have spent millions of dollars to press their respective cases with state lawmakers.

Tobia said his bill had not been scheduled for a committee hearing this session. With "no movement on the Senate side" and Scott firing a shot across the bow, Tobia said, "It doesn't make sense to use political capital to push it.

"I respect the governor's decision, but I don't agree with it. We'll live to fight another day, if it's in the cards," he said.

Despite repeated legislative efforts to bring Dosal into the settlement, no bill has ever cleared a committee.

In a bit of irony, Tobia noted that Republican Gov. Haley Barbour signed legislation in Mississippi applying that state's tobacco-settlement fees to Dosal. Barbour is currently considering a run for president.

Before Tobia's announcement, Jim Smith, of the Coalition for Fairness in Florida, acknowledged the Dosal bill faced "an uphill climb."

Smith estimated that adding 40 cents to each pack of Dosal cigarettes could bring the state an additional $50 million to $90 million a year.

Tobia said he had hoped to use those proceeds to offset revenue losses from Scott's proposed corporate-income tax cut.

Mike Huey, a lobbyist for Dosal and an attorney with the law firm of GrayRobinson, called such revenue projections overly optimistic and questioned the propriety of tapping Dosal 14 years after the tobacco settlement was consummated.

Ultimately, lawmakers had no stomach for anything that smelled like a tax increase.

"There was no appetite for taxing [Dosal]. The Legislature was preparing budgets without including any additional taxes or fees," Huey said.

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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.

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