US tobacco growers fume over price threat: Rumours that a tax hike on cigarettes will fund health reforms have brought fear and fury to North Carolina, writes David Usborne in Bunn
Friday 14 May 1993
The object of the farmers' ire is a proposal from Washington that may not yet be formally on the table but which everyone knows is coming: a mighty increase in federal taxation on cigarettes to help finance the health care reforms expected to be unveiled by Hillary Clinton next month.
The extent of the likely increase is, indeed, daunting. If the rumours emanating from Mrs Clinton's White House office are true, the federal tax may go up by as much as dollars 2 ( pounds 1.25) a pack. With the tax now set at only 24 cents, that would mean doubling the cost of cigarettes to smokers overnight. And, according to the tobacco industry, it could lead to the loss of 750,000 jobs across the tobacco-growing belt, with 87,000 at risk in this state alone.
'This kind of tax amounts to what the British did to the Americans,' says John Vollmer, a grower in the tiny community of Bunn, north-east of Raleigh, the state capital. He enjoys pointing out the historical parallels with the resentment sown in the 18th century by excises imposed by the Crown on tobacco exports to England. 'And that led to revolution]'
Revolution may not be an option today, but the tobacco industry means to make its grievances known. Yesterday fleets of buses converged on Washington bearing growers from North Carolina as well as workers from the R J Reynolds cigarette factory in Winston Salem to protest against the threatened tax. Cigarette manufacturers have identified about 500,000 'confirmed' smokers and urged them directly to voice their opposition to Congress.
Mr Vollmer, who runs his 300-acre farm with his wife, Betty, calculates that if the dollars 2 tax goes through he will have to cut his tobacco cultivation by half. At that level he may no longer be viable. Although he farms 300 acres, a strict quota system means only 70 acres are currently put down to tobacco. But that small acreage provides 90 per cent of his income.
He went to Washington two months ago, when word of the tax was first out, to lobby members of Congress for sympathy. After the first meeting, he now relates, he found himself jotting a single thought on his note-pad: 'Get a job'. He remembers: 'I really felt depressed and quite defeated. Quite frankly, we hadn't expected the congressmen to seem so frightened. It was as if they had no confidence at all that they could stop this thing'.
Working against Mr Vollmer and the tobacco industry as a whole is a compelling logic behind the tax-increase proposal: that the funding of a new health-care system should be provided in large part by a segment of the population that itself puts a disproportionate burden on the hospitals through smoking-related illnesses. Increasing the excise would not just generate cash but perhaps depress the numbers of smokers as well. Even with reduced demand for cigarettes, a dollars 2 increase would generate an extra dollars 30bn annually.
And, at a time when Mrs Clinton has banned smoking in the White House and her husband has pledged to spend an extra dollars 10m on anti-smoking campaigns, it is a logic that apparently is in tune with popular sentiment. A Gallup survey released this week, showed 73 per cent of Americans favouring higher taxes on tobacco, with 67 per cent in favour of the dollars 2 increase.
In the settlement of Battleboro, about 30 miles east of the Vollmer farm, Bruce Flye, a fellow grower, reflects on what a dollars 2 increase would do to the community. With much of the land he farms leased from small owners, he reckons that 28 people would suffer at once if a cut in demand reduced his quota and therefore his viability. 'I would hate to lose my income but I have more feeling for all these other people that would be hurt,' he explains. 'I would really hate to see the rug pulled out from under them'.
Similar fears are voiced by Bob Marriott, owner of Battleboro's only hardware and agricultural supply store, who points to the likely knock-on effect on businesses that supply the tobacco industry. 'It would be the ruin of the whole community. The way the farmers go is the way we go.'
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