Tobacco Lobby Turns Attention to Global Market

Lack of popularity often translates into bigger lobbying bills, but that hasn’t been the case in recent years with the tobacco industry.

Not in the U.S., at least.

Tobacco companies spent $17 million on lobbying in Washington last year, according to tallies compiled by the Center for Responsive Politics. That was the second lowest amount in the last 14 years, with 2010 just slightly lower, at $16.7 million.

Altria, parent company to Philip Morris USA and U.S. Smokeless Tobacco, led the group, with total spending of $11 million. Second on the list was Lorillard, maker of Newport, Kent and other cigarette brands, which spent $2.6 million.

Altria employed 23 outside lobby firms in the last quarter, terminating its contract with one firm – Groom Law Group.

Big tobacco had a victory in Washington last month, when the Senate passed a highway appropriations bill that included an amendment increasing taxes on shops with roll-your-own cigarette machines.

A current loophole permits these retailers to sell tobacco at a lower rate than is charged for commercial cigarettes.

Despite its lobbying efforts and sizeable contributions to political campaigns – $2.4 million in the 2010 cycle – the industry has faced massive opposition at all levels of American government:

• The federal government imposed the largest-ever hike in tobacco taxes in 2009.

• The Centers for Disease Control and Prevention has called for laws banning smoking in work sites and public places in all 50 states. The agency recently began a $54 million ad campaign aiming to reduce the number of smokers by 50,000 people.

• New York Mayor Michael Bloomberg has become a major opponent of tobacco not only at the city level, but across the globe. After banning smoking in restaurants, bars and public spaces in his own city, he recently announced that he would donate $220 million to combat tobacco use abroad.

Bloomberg is following the focus of the industry. After so many defeats in the U.S., the tobacco lobby is targeting the global market, with a special emphasis in developing countries.

Altria Group spun off Philip Morris International Inc. as a separate company in 2008. The spinoff now ranks higher on the Fortune 500 list than the former parent. Philip Morris ranked 94th in 2011, with revenues of $27.2 billion. Altria was 154th, with revenues of $3.9 billion.

The importance of government connections can be seen Philip Morris International’s board, which includes former Defense Secretary Harold Brown and former UK House of Commons member J. Dudley Fishburn.

Although based in New York, the company concentrates on overseas sales and does no lobbying in Washington.

That’s not to say that it doesn’t face mounting challenges outside the United States.

With funding from Bloomberg Philanthropies, the World Health Organization produced a report last year noting the effectiveness of taxes on reducing tobacco use. Not only do consumers balk at paying significantly higher prices, but governments tend to look favorably on new revenue sources.

Last month Margaret Chan, WHO director general, announced a marketing campaign to discourage smoking among young people.

Chan noted that the tobacco industry was pushing for joint government-industry committees to shape policy.

“Don’t fall into this trap,” she warned. “Doing so is just like appointing a committee of foxes to look after your chickens.”

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Outside lobby firms employed last year by Altria:

• Arnold & Porter LLP
• Bingham McCutchen LLP
• C2 Group, LLC
• Capitol Hill Strategies, LLC
• Capitol Legislative Strategies LLC
• Capitol Tax Partners, LLP
• Cauthen Forbes & Williams
• Crossroads Strategies, LLC
• Donald M. Nelson, Jr., LLC
• Groom Law Group, Chartered
• JDM Public Strategies, LLC
• Mattoon & Associates, LLC
• Mr. Burleigh Leonard
• Mr. Richard F. Hohlt
• Mrs. Susan Platt
• Palmetto Group
• R. B. Murphy & Associates, LLC
• Raffaniello & Associates, LLC
• Ryan MacKinnon Vasapoli and Berzok LLP fka Ryan Phillips Utrecht and MacKinnon
• SNR Denton LLP (fka Sonnenschein, Nath and Rosenthal)
• The Russell Group, Inc.
• Troutman Sanders Public Affairs Group, LLC
• Venable LLP

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U.S. legislation lobbied last year by Altria:

• 112 H.R.1639: Traditional Cigar Manufacturing and Small Business Jobs Preservation Act of 2011
• 112 H.R.2055: Consolidated Appropriations Act, 2012
• 112 H.R.2112: Consolidated and Further Continuing Appropriations Act, 2012
• 112 H.R.2: Repealing the Job-Killing Health Care Law Act
• 112 H.R.3091: To make permanent the individual income tax rates for capital gains and dividends.
• 112 H.R.3186: Smuggled Tobacco Prevention Act of 2011
• 112 H.R.3630: Middle Class Tax Relief and Job Creation Act of 2012
• 112 H.R.3765: Temporary Payroll Tax Cut Continuation Act of 2011
• 112 H.R.4: Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of
• 2011
• 112 H.R.658: FAA Modernization and Reform Act of 2012
• 112 H.R.65: Candy Tobacco Tax Parity Act of 2011
• 112 H.R.942: American Research and Competitiveness Act of 2011
• 112 S.1403: IDEA Full Funding Act
• 112 S.1461: Traditional Cigar Manufacturing and Small Business Jobs Preservation Act of 2011
• 112 S.1647: A bill to repeal the sunset on the reduction of capital gains rates for individuals and on the taxation of
• dividends of individuals at capital gain rates.
• 112 S.1706: Smuggled Tobacco Prevention Act of 2011
• 112 S.174: Healthy Lifestyles and Prevention America Act
• 112 S.18: Small Business Paperwork Mandate Elimination Act
• 112 S.223: FAA Air Transportation Modernization and Safety Improvement Act
• 112 S.72: Small Business Paperwork Mandate Elimination Act of 2011
• 112 S.794: Protecting American Taxpayers from Misconduct Act
• 112 S.968: Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011