House Kills Tobacco Credit

The House voted Wednesday to repeal a special $50 billion tax break for cigarette manufacturers that had been inserted at the last minute into earlier balanced budget legislation.

By voice vote, the House moved to kill a contentious provision of a new tax law that would have let industry slice $50 billion off any payments ordered under a proposed national tobacco settlement.

The Senate last week voted 95-3 to quash the tobacco credit making its elimination virtually certain.

"This vote will say to the American people that we stand for their health and their children's health and the taxpayers should not be required to pay to bail out the tobacco industry," said New Jersey Republican Rep Marge Roukema.

 

As part of a balanced budget and tax legislation last summer, Congress voted to raise tobacco taxes and use the money for children's health care.

But a single sentence inserted into the bill at the last minute gave the industry a $50 billion credit -- the amount that could be raised by the new tax -- against the $368.5 billion tobacco settlement, should Congress enact it.

House Republican leaders, who helped tuck the original credit in the tax bill, in the end did not fight repeal.

The tax credit provision became a lightning rod over the past month for public skepticism about the tobacco industry and its influence in Congress.

The original tobacco settlement proposal between cigarette firms and state attorneys general has languished in Congress but President Clinton Wednesday urged lawmakers to work on a tougher, revised settlement plan next year.