CITIZENS
for
Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
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CLT Update
Wednesday, June 23, 1999



Testimony of Chip Ford
on S.1635

To Provide for the Return to the Taxpayers
of the Proceeds from the Nationwide Tobacco Settlement

before the Joint Committee on Taxation
Wednesday, June 23, 1999


In 1989, due to fiscal mismanagement by the Dukakis administration, the state income tax rate was "temporarily" increased from 5 percent to 5.75 percent. The estimated $793 million annual revenue increase was to be used to close a $375 million FY '89 budget gap, to compensate hospitals for $50 million lost through a shortfall in federal Medicare funding -- and to pay $484 million in past Medicaid bills.

A decade later, taxpayers have long ago paid off the state's Medicaid debt but the "temporary" income tax rate is still stuck at 5.95 percent.

In his lawsuit against the tobacco industry, Attorney General Scott Harshbarger argued before the courts: "[E]ach year, the Commonwealth must spend millions of dollars to purchase or provide medical and related services for Massachusetts citizens suffering from diseases caused by cigarette smoking. ... The 'smoking-related costs to the Commonwealth' are said to include, but not be limited to, 'medical assistance provided under Massachusetts' Medicaid program' and 'medical assistance provided under the Common Health Program.' The complaint seeks 'both monetary damages and injunctive relief.'"

He added: "As the Supreme Judicial Court has held, reimbursement is simply 'repaying or making good the amount paid out.'"

In the New York state lawsuit against the tobacco industry, its Attorney General noted: In 1994, a number of states took the unprecedented step of commencing legal actions against manufacturers of tobacco products and other related entities seeking, inter alia, money damages for the substantial public health costs incurred through Medicaid and other programs associated with the treatment and care of persons suffering from tobacco-related illnesses such as cancer, emphysema, and heart disease."

Only one Attorney General seems to have separated himself from the ongoing bait-and-switch scam, Charles M. Condon of South Carolina, who stated of the settlement in a news release:

"These funds -- the $2.2 billion dollars designated for South Carolina -- are reimbursements -- reimbursements to the taxpayers of our state for dollars already spent.

"It would be a terrible injustice if those funds were used to pay for more government programs and more bureaucracy or to grow the government in any way.

"Let's give this money back to the taxpayers."

The taxpayers have paid the cost of health care for uninsured smokers with tobacco-related illnesses; we have paid the same Medicaid bill over and over again a number of times. A decade later and we are still burdened with the promised "temporary" income tax increase, a huge revenue surplus due to continued over-taxation, and now an additional $8.3 billion taxpayer "reimbursement" that some want to spend.

It took 207 years for the state to reach its first $10 billion budget, but only the last dozen to more than double it. When is enough enough?

I hope this Legislature will not be a party to the ongoing bait-and-switch scam, and will insure that taxpayers get their long overdue promised relief, that they finally receive their just reimbursement for their decades of compassion.

As then-Attorney General Harshbarger so aptly pointed out to the court, using the very words of the Supreme Judicial Court itself:

"Reimbursement is simply repaying or making good the amount paid out."

(Attached were quotes on the true intent of the tobacco lawsuit)


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