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18TOBACCOOUTLETBUSINESSMAYJUNE2009NEWSTRENDSMAYJUNE2009RetailersandwholesalersarebandingtogetherinFloridatoprotestaproposed1extralevyoncigarettespredictingthatitwilldrivesmokerstoseekillicitmeansopurchasingcigarettestax-ree.TheFloridaPetroleumMarketersandConvenienceStoreAssociationFPMAandtheFloridaAssociationoWholesaleDistributorsFAWDteameduptoproduceavisualdisplayothispredictionbydrivingan18-wheeltruckamovingtruckandacargovantothestateCapitolx19scourtyardandnotingthatallthreevehiclescouldeasilybeflledwithcontrabandcigarettesitheextralevywerepassed.ThisincreaseinFloridax19sstatecigarettetaxx14currently33.9centsperpackx14isunderconsiderationasafxorthestatex19sbudgetdefcitwhicheconomistssaycouldbeashighas6billion.Proponentsothetaxincreasesayitwillbringinanadditional1billionperyear.Buttheprotestingassociationscounterthatwhatitwillreallybringisahugeblackmarketincigarettes.AccordingtotheMichigan-basedMackinacCenterorPublicPolicycigarettesmugglingbecomesmoreattractivewhenneighboringstatesboastmuchlowertaxes.BecauseSouthCarolinax19staxis7centsGeorgiax19s37centsandAlabamax19s43centsFloridacouldeasilybecomeamarketorborder-hoppingopportunists.TheFPMAandtheFAWDnotedthatthesmallestvehicleondisplayattheCapitolx14thecargovanx14couldcarry100000ocontrabandcigarettesacrossSouthCarolinax19sbordertoFlorida.Asemi-trailercouldcarrycontrabandcigarettesworth2.5million.x1cThegoalasstatedbytheLegislatureistoreducesmokingandincreaseundsorthestateoFloridax1dJimSmithpresidentotheFPMAtoldtheNewsServiceoFlorida.x1cWefnditdifculttounderstandhowyoucanregulatepersonaldecisionsthroughsomeonex19swallets.Butmoreimportantwethinkthatpeopleneedtounderstandtheunintendedconsequencesothislegislativeeort.x1dStateSen.TedDeutchwhoispushingorthecigarettetaxsaysthatsuchclaimsareanexaggeration.x1cItx19sonethingtogrosslyexaggeratetheimpactocross-bordersaleswhichcommonsensedictateswouldbeasminimalhereasinanystategivenourgeographyandpopulationcentersx1dDeutchsaid.x1cButitx19sabsolutelyrecklesstoemployscaretacticsonFloridiansbyinventinganinusionoviolentcrimeinadesperateattempttofghtoallthingsameasureeveryoneknowswillsavelivesratherthanendangerthem.x1dButSmithcountersthatwhilesomesmokersmightbepromptedtoquitmorearelikelytofndotherwaystobuycigaretteswhetherthatmeansbuyingovertheInternetorillegallytransportingcigarettesacrossstateborders.DavidSheppFAWDx19sexecutivedirectorreportedthatcigarettesalesaccountormorethan10000retailjobsinthestateoFloridaandthetaxincreasecouldcostasmanyas2400jobsatatimewhenpeopleacrossthecountryaregrapplingwithaturbulenteconomy.TaxesWillSpurCrimeSayMerchantsFloridaretailersandwholesalerspredictaspikeinbootleggingactivity.PhilipMorrisUSAandR.J.ReynoldswononeothefrsttobaccolawsuitsGelepv.R.J.ReynoldsandPhilipMorrisUSAtoollowthe2006FloridaSupremeCourtdecisionthatdecertifedtheEngleclassactionsuitbutenabledormerclassmemberstofleindividuallawsuitsaccordingtothecompany.Callingthejuryx19sdecisionx1cthecorrectresultx1dMurrayGarnickAltriaClientServicesseniorvicepresidentandassociategeneralcounselreportedthatthiswasthethirdcasetriedtoaverdictsincetheFloridaSupremeCourtx19sdecision.Stillpendinginederalcourtare4000individualclaimsfledatertheFloridaSupremeCourtx19sdecision.ThosecaseshavebeenputonholdpendingaederalappealscourtreviewotheconstitutionalissuesthatariseromallowingtheplaintitorelyonpriorEnglejuryfndingsaccordingtoPhilipMorris.x1cThejuryx19sverdictinthiscaseshowsthatPhilipMorrisUSAstillhaspoweruldeensesinthesecasesevenwhenthetrialcourtmisinterpretstheFloridaSupremeCourtx19sholdinginEngleandallowstheplaintitoimproperlyrelyonapriorjuryx19sfndingsthathavenoconnectionwiththeplaintix1dGarnicksaidinacompanyrelease.x1cPhilipMorrisUSAwillvigorouslydeendeachindividualEngleprogenycasethatgoestotrial.Wecontinuetobelieveeachplaintimustprovetheessentialelementsotheirclaimsandthatwecontinuetohaveverystrongdeensestothesetypeocases.x1dPhilipMorrisWinsinEngle-relatedCaseAjuryruledinfavorofthemanufacturerinMarch.