Senator Eyes Tobacco Ad Tax Rules

WASHINGTON, D.C. – Sen. Jack Reed today plans to offer an amendment to legislation being debated in the Senate that would remove tax benefits from tobacco advertisers deemed to be targeting children.
A representative for Reed, D-R.I., said the amendment will be proposed when debate on the tobacco bill resumes. “If the tobacco companies don’t comply with marketing restrictions to protect kids, then they should pay for it,” Reed said in a statement.
The Senate had hoped to vote on the national tobacco legislation two weeks ago. The precarious consensus among senators as to what exact measures the bill should contain fell apart, however, delaying it on the Senate floor. The measure remains alive until the legislative session ends for the summer.
Among the sticking points–which range from increasing cigarette taxes to immunity for tobacco companies–there is support for using the ad tax deductibility benefit (a tax break that all marketers now receive) as a regulatory enforcement tool, sources said.
If the bill passes, the Federal Drug Administration would have the power to decide whether the rules had been broken. Among the factors that would raise a red flag for the FDA are ads with content that might appeal to youngsters, such as the defunct Joe Camel character, and ads placed in publications with a significant juvenile readership.
“Once you decide whether you get a deduction for advertising based on whether Congress likes your advertising, many categories are going to be under attack,” said Dan Jaffe, executive vice president of the Association of National Advertisers. Congress has previously failed to take away the tax deductibility of ads for prescription drugs, violent film and television programming and alcohol.
“This is a very specific proposal tied to the FDA rules,” said Reed’s representative, who added that the senator anticipates no First Amendment problems with the measure.
Separately, the Republican leadership in the House–which has been accused by public health groups of rolling over for Big Tobacco–is drafting a bill that would deny cigarette companies tax deductions for advertising, lawyers fees and court costs. U.S. Rep. Deborah Pryce, R-Ohio, heads that effort.