USSTC to Challenge Tax Hike

U.S. Smokeless Tobacco Co. (USSTC) has filed suit in California Superior Court to overturn the recent action of the California State Board of Equalization that resulted in increases in the state excise tax on smokeless tobacco products, including its Copenhagen and Skoal brands.

"The State Board of Equalization in late June departed from its past practice of simply calculating the smokeless tobacco tax, and instead took it upon itself to raise the tax to the highest levels ever seen," said Murray Kessler, president, U.S. Smokeless Tobacco. "On behalf of our loyal adult consumers, we are outraged by the increase and believe the board's action violates California law and is unconstitutional. We also believe that this action will result in an uncontrolled black market that is clearly not in the best interests of the State of California and its citizens."

USSTC's co-plaintiffs in the suit are Core-Mark, a distributor of tobacco products, and the California Association of Retail Tobacconists (CART). The three plaintiffs are asking the court for a preliminary injunction to halt the new rate, substituting the rate applicable to all other tobacco products, such as cigars, until a final judgment is reached.

"Our adult consumers have been targeted for an unfair penalty that is based on mistaken assumptions and goes well beyond the board's legal authority," Kessler said. "No organization or individual testified in favor of this proposal before it was adopted. Even the board's own staff opposed it. We are convinced that we will ultimately prevail."
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