Our state lawmakers will soon have to make incredibly difficult decisions to address Florida’s unprecedented budget crisis. In times like these, funding for critical services like health care may face drastic reductions. Important legislation that would close the notorious “Non-Participating Manufacturers loophole” in Florida’s tobacco policy would help remedy our budget shortfall.
The 1997 Florida Tobacco Settlement Agreement effectively requires smokers of products made by major tobacco manufacturers to pay an extra 40 cents per pack of cigarettes to help defray some of the state’s health care costs. At the time of the settlement, a handful of small tobacco companies, including Miami-based Dosal Tobacco Corporation, were not required to join the settlement since their share of the state’s cigarette sales was less than 1 percent.
These so-called NPMs have been able to sell their products at much cheaper rates than their competitors who pay into the settlement. This unfair and unjustified advantage has exponentially increased their market share. NPMs now command nearly 22 percent of the cigarette market in Florida and Dosal alone represents more than 80 percent of these sales.
Florida is now one of only two states that have failed to correct this inequity by imposing a fee on NPM products. The sad reality is this loophole has cost Florida more than $1 billion and we will keep losing money if lawmakers do not impose this surcharge across the board.
Dosal claims it is “Little Tobacco.” This is from a company that is now the second-largest seller of cigarettes in Florida – a company that sells more cigarettes than two of the three companies who contribute to the settlement. Dosal employs dozens of lobbyists and is an industry leader in political contributions. In reality, Dosal is truly nothing less than “Big Tobacco” in Florida.
Dosal also asserts that imposing of a 40-cent fee will put them out of business. This is false. Dosal conveniently forgets to mention they also sell their products in 14 states that already have similar fees and they still remain competitive.
Finally, Dosal argues that the settlement was solely based on the unseemly conduct of Big Tobacco in the ’60s and ’70s and that they were omitted because they did not engage.
Former Florida Attorney General Bob Butterworth, the man who led the settlement negotiators for the state, says that nothing could be further from the truth.
He has stated that the settlement was all about paying future health care costs – costs that Dosal smokers incur just like their peers.
The bottom line is that there are no credible facts or policy considerations that justify giving one of five smokers a free pass on paying their fair share of health care costs.
Legislation to close this price disparity will raise more than $175 million in additional and desperately needed Medicaid dollars.
It’s clearly time for the Legislature to ignore Dosal’s factual fantasies and close this loophole once and for all.
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