Commonwealth Brands, Inc. Opposes West Virginia's Proposed $1 Per Pack Increase

CHARLESTON, W.Va., Feb. 16, 2011 /PRNewswire/ -- On behalf of its smokers and customers, Commonwealth Brands urges West Virginia to reconsider any proposal to increase the excise tax on tobacco products. On February 1, 2011 Delegate Don Perdue introduced a Bill that would increase the tax on cigarettes by $1 a pack. Commonwealth Brands, the manufacturer of USA Gold and Sonoma cigarettes, strongly opposes the Bill stating that an increase will promote the growth of cigarette counterfeiting and increase the level of cross-State shopping and tax avoidance.

In a letter written on February 3, 2011, addressing a similar tax increase sponsored by Perdue earlier this year, Anthony Hemsley, Vice President of Corporate and Government Affairs, referred to a report released by the U.S. Department of Justice, Office of the Inspector General in September of 2009, that concluded tobacco tax increases can be highly regressive and unpredictable in terms of actual funding generated.  It was estimated in the report that over $5 billion was lost in revenue each year due to unpaid federal and state excise tobacco taxes.

Hemsley stated, "Past projections based on historical tobacco sales' volumes have led to significant shortfalls. A state excise tax increase on cigarettes in 2011 will only serve to jeopardize existing state revenue from tobacco. Dependence on additional taxation levied on a consumer product with sales already in decline does not amount to good policy."

In addition, Commonwealth Brands sent a letter to State Senator Roman Prezioso of West Virginia, who has sponsored an identical Bill to that of Perdue's. The Company has reminded both Members of the burden that such a tax will place on low-income taxpayers and consumers, in addition to punishing local businesses that rely heavily on tobacco products to generate sales and sustain employment.

Commonwealth Brands, Inc. is the fourth largest tobacco manufacturer in the United States. Its cigarettes include Davidoff, Sonoma, Montclair and USA Gold, one of the nation's best selling brands.*  Its portfolio of fine tobaccos consists of the Premier, McClintock, Rave and Bali Shag brands. The company also manufactures a range of tobacco related products, which include Premier, Rizla, and El Rey cigarette tubes and E-Z Wider and Joker cigarette papers. Commonwealth Brands, Inc. is based in Bowling Green, Kentucky, and employs approximately 900 people throughout the country. The Company is committed to it employees, its brands and its consumers.

*Source:  Management Science Associates, Inc.

SOURCE Commonwealth Brands, Inc.