Lawsuit pending regarding cig fee

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Big tobacco is challenging San Francisco policies yet again.

Philip Morris USA and several local retailers recently filed a complaint in San Francisco Superior Court accusing The City of violating state law when it imposed a 20-cent charge on packs of cigarettes on Oct. 1 without approval from voters.

The complaint is a precursor to a lawsuit.

The main point of contention is whether the added charge to cigarette packs should have been implemented as a tax or a regulatory fee.
Under state law, new taxes require approval from two-thirds of voters. However, local governments can charge a fee for programs without seeking voter input if they can prove there is a cause-and-effect link.

San Francisco lawmakers justified implementing the new charge without putting it up for a vote by saying the money generated would pay to clean up cigarette butts that are illegally discarded on streets and in gutters.

Smokers should have to pay a fee to cover the cost of cleaning up butts — which is about $7.5 million annually in San Francisco, according to a study commissioned by The City.

That sum should not have to fall upon taxpayers who do not smoke, Mayor Gavin Newsom said when pushing for the fee last year. Around 14 percent of adult San Franciscans are smokers, according to The City.

The Board of Supervisors embraced the fee in July.

Philip Morris, which produces popular cigarette brands such as Marlboro, Virginia Slims and Parliament, says The City disguised the
20-cent charge as a fee when it was clearly a tax.

“And because it’s a tax, The City violated the law,” said Jack Marshall, a spokesman for the tobacco company.

The complaint rejects the argument that smokers should pay for cleanup costs, stating that not all smokers in The City chuck their butts illegally.

The City appears ready to fight the complaint.

“Our view is that [the fee] is entirely permissible,” Deputy City Attorney Wayne Snodgrass said. “We are allowed to place those costs on those who engage in the activity that makes those costs necessary.”

The City must respond to the complaint within 30 days.

This is not the first time The City and Philip Morris have butted heads. The nation’s largest tobacco company recently challenged The City’s ban on tobacco sales in pharmacies. It dropped its legal challenge in October, a month after a federal appeals court in San Francisco upheld the law.

maldax@sfexaminer.com

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