Small tobacco companies cry foul.

• Author: Rowland Bob
• Position: Letters and Books - Letter to the Editor

Editor:

Your recent article "States Tackle Deep Discount Cigarettes" says that "cheap cigarettes have undercut major tobacco companies and their ability to make payments to states under the master settlement agreement." Nothing could be further from the truth.

Participating manufacturers are experiencing a drop in sales volume because of declining smoking rates, rising state excise taxes and their failure to compete with independent brands on price--not because of provisions in the settlement.

Supporters of legislation to block nonparticipating manufacturers from obtaining a release on their escrow deposits (allocable share provisions) see this as a way to put manufacturers of independent brands out of business. Ironically, some established small companies, mostly foreign manufacturers, who have no U.S. tax liability, support this legislation because it will eliminate their smaller competitors. These brands will continue to be in business and price their products lower than big tobacco. Legislation repealing allocable share provisions will result in shutting down...