摘要：Prospects of congress passing some form of the proposed tobacco settlement arediminishing rapidly. In lieu of the proposed settlement many close to the legislative processthink that the federal excise tax on cigarettes may be increased substantially, perhaps by asmuch as $1.50 per pack. Should such a large increase in cigarette taxes occur, what wouldbe the effect at the farm level. Obviously if the cigarette tax increase results in a decline inUS cigarette consumption, demand for US burley and flue-cured tobacco will be adverselyimpacted. Under the current tobacco program this decline in US cigarette consumptionwould be reflected in lower marketing quotas and a consequent decline in farm revenuesfrom tobacco. Tobacco growers and quota owners are seeking compensation for damagesfrom any comprehensive tobacco legislation such a settlement or tax increase. SenatorRichard Lugar introduced a bill in the fall of 1997 that would provide compensation, butwould also eliminate the tobacco program. A second question is then what might be thefarm level effects of simultaneously increasing the federal excise tax on cigarettes andeliminating the tobacco program.
