MICHIGAN 38TH STATE TO GO SMOKE FREE!

Today, December 10, 2009, the Senate passed and the House concurred with HB 4377 which bans smoking in most public places statewide. It is currently on its way to Governor Granholm’s desk to be signed into law.

Here are some of the high (and low) lights of this historic legislation:
· The bill’s official title is “The Dr. Ron Davis Act of 2009”
· Under this legislation, ALL BARS AND RESTAURANTS will be non-smoking.
· The effective date is May 1, 2010
· The labor union exemption that was included in the original version of this bill has been stripped out!
· Tobacco specialty stores may be exempted provided they meet the following requirements:
o Their primary purpose must be the retail sale of tobacco products and smoking paraphernalia.
o Owners must prove that the store generated 75% or more of its total gross annual income from the on-site sale of tobacco products and smoking paraphernalia (meaning online sales DO NOT COUNT).
o This does NOT include any establishment with any type of liquor, food, or restaurant license. Translation: 95% of the hookah bars will have a choice – “Get rid of your food license or get rid of the hookah.”
· Cigar bars may be exempted provided they meet the following requirements:
o They must be in existence on May 1, 2010.
o Cigar bars MUST have an installed on-site humidor.
o Owners must file an affidavit proving that the cigar bar generated 10% or more of its total gross annual income from the on-site sale of cigars and the rental of on-site humidors.
o The smoking area must be physically separated and enclosed on all sides from any non-smoking areas.
o The cigar bar prohibits the smoking of all other tobacco products (no hookah, no pipes, no cigarettes, etc).
o The cigar bar allows only the smoking of cigars on the premises that retail for over $1.00 per cigar (none of those cigarettes masquerading as “little cigars”).
o You must purchase the cigar on the premises if you’d like to smoke in the cigar bar.
· Casinos are partially exempted
o Only the gaming floors of casinos are exempted.
o All bars and restaurants that are in or are part of a casino may not allow smoking.
· This bill passed 24-13 in the Senate and 75-30 in the House.

Although we would have preferred a comprehensive bill without exemptions, this is still a very well written bill and will protect a majority of Michigan’s workers from the dangers of secondhand smoke.

More importantly, this legislation passed because of YOUR EFFORTS. It was your tireless phone calls, visits to legislators, emails, and letters that kept the pressure up and ultimately got this passed. Enjoy this moment! We still have some work ahead of us, but are more than halfway there. We will be in touch in the near future with next steps.

Thank you, all of you, again. Now, go celebrate!

ACTION ALERT:

As you may know, Governor Granholm recently released her plan to balance the budget. Among her solutions to the multibillion dollar deficit were increasing the cigarette tax by twenty-five cents and doubling the Other Tobacco Products tax (64% of the wholesale price). Sadly, the Governor’s plan also included a $150-million cut to the Michigan Department of Community Health. (See Free Press article here)

It is important that key political leaders in the state executive and legislative branches hear from us over the next week as we convey the importance of allocating funding for tobacco prevention and cessation programs. The message is: “Raising the cigarette tax and the tax on other tobacco products is essential for saving lives and health care dollars.”

Please thank the Governor and Bob Emerson for proposing the tax increase and urge them to dedicate a portion of the revenue generated to helping people quit smoking and prevent kids from starting.

Governor Granholm: http://www.michigan.gov/gov/0,1607,7-168-21995---,00.html
Bob Emerson: EmersonB@michigan.gov

Please contact the House and Senate leadership, as well as their own legislators, with this additional message: “Raising the cigarette tax and the tax on other tobacco products is essential for saving lives and health care dollars. I urge you to dedicate a portion of the revenue generated to helping people quit smoking and to prevent kids from starting.”

Senator Bishop 517-373-2417; senmbishop@senate.michigan.gov
Find Your Senator: http://senate.mi.gov/
Representative Dillon 517-373-0857; andydillon@house.mi.gov
Find Your Representative: http://house.mi.gov/find_a_rep.asp

Due to the high volume of emails most legislators are receiving daily, it may be more effective to place a phone call.

Hey Convenience Store Lobby, don’t look now, but your pants are on fire

Last week the Michigan Petroleum Association and Michigan Association of Convenience Stores released an “Analysis of the Impact of an Increase in the Michigan Cigarette Excise Tax.” It is a “study” filled with incorrect data, out of date research, and numbers cooked up by tobacco funded statisticians. The point of the study was to demonstrate the regressive nature of tobacco taxes, but the researchers failed to extrapolate their data and thus their early arguments tend to focus on the benefits of a tobacco tax increase (like a $165.2 million increase in state revenues).

The researchers used quotes throughout the study to “prove” their points. Quotes from the Heartland Institute (a think tank funded, in part, by Phillip Morris) and Americans for Prosperity (a group that has been underwritten by tobacco companies) permeate the study, using the same type of “slippery slope” arguments made famous by Phillip Morris during the tobacco cases of the 1990s.

In addition some of the statistics used are wildly out of date. TFM counted fourteen errors on the “State Excise Tax Rates and Tax Revenues Sheet” cited in the study. The actual tobacco tax rates varied between $0.07 and $1.00 over what was listed. The study’s claim that Michigan has the sixth highest tax rate is off by four positions and Wisconsin’s cigarette tax rate will exceed Michigan’s by $0.52 on September 1.

Here are the study’s main arguments and faults:

Argument: Cigarette excise taxes are an unreliable, declining, and unstable funding source.
o The Truth: States that have raised their cigarette tax rates have subsequently received more tax revenue than they would have received without a rate increase, despite the fact that cigarette tax increases reduce state smoking levels and despite any related increases in cigarette smuggling or tax evasion. Higher revenues obtained by cigarette tax increases will decline over time as smoking rates continue to go down, but the revenue changes will be gradual and predictable. Moreover, cigarette and overall tobacco tax revenues are more predictable and stable than state income tax or corporate tax revenues, which can decline sharply during recessionary periods.

Argument: Michigan smokers will turn to border sales, Indian reservations, the internet, and counterfeit smuggling operations.
o The Truth: Smuggling and tax evasion account for only a relatively small minority of cigarette sales and do not come close to eliminating revenue gains or making tax increases unproductive.

Argument: A 25-cent increase in Michigan's current cigarette excise tax of $2 will likely result in huge losses to Michigan’s Convenience Store profits.
o The Truth: When c-store owners were asked how their cigarette trends have been relative to excise tax increases, “90% said in line or better than they expected…” Since the federal excise tax increase, industry profits have actually grown for tobacco companies. Reynolds reported an 8.2% increase, Altria reported a 3.8% increase, and Lorillard’s profits increased 21.4%. Consumers didn’t stop consuming, they just switched brands, reported UBS tobacco analyst Nik Modi. Moreover, money spent currently on cigarette sales will not disappear when the smoking declines from a cigarette tax increase reduces cigarette sales, it will simply shift to consumer expenditures on other alternatives.

Argument: Cigarette excise taxes target low-income consumers and are regressive.
o The Truth: Higher smoking rates among lower-income groups means they are now suffering the most from smoking and will, consequently benefit the most from any effective new measures to reduce smoking, including tobacco tax increases. Low-income smokers are much more likely to quit because of state tobacco tax increases than higher-income smokers.

Therefore any state that significantly increases its cigarette tax rate will also end up increasing the portion of the state’s total cigarette tax revenues that are paid for by higher-income smokers and reduce the portion paid by lower-income smokers. It’s also important to note that cigarette companies (and the convenience store lobby) have no problem with levying new charges on low-income smokers when it increases their own profits.

Michigan’s economy is in dire straits. We need a win and tobacco tax increases are that win. The Governor’s proposed tax increase is a win for health, a win for the state budget, and a win with the public. The tax increase would result in reduced youth tobacco use, generation of over $150 Million in new state revenue, and is overwhelmingly supported by Republicans, Democrats, and Independents alike.