For 30 years cigarettes have escaped a federal tax increase. But this year the powerful tobacco interests have run into double-barreled trouble - Congress needs more revenue and growing antismoking sentiment justifies getting that money from cigarette users.
Led by Robert Dole (R) of Kansas, the Senate Finance Committee has approved a tax bill that would double the 8-cent federal excise tax on each package of cigarettes. The measure, which would bring in about $1.2 billion in new taxes next year, is only a small part of the $21 billion in proposed tax increases. But it is already among the most controversial.
While other parts of the Dole tax bill are understood only by a handful of experts and corporate accountants, the excise tax is clearly visible to consumers. Partly for this reason, Congress has shied away from such product taxes, and it has not raised the cigarette tax since 1951.
But now that Congress is staring at a towering $100 billion plus deficit, it is ready to consider seriously the tobacco tax, over the objections of the tobacco industry.
The Tobacco Institute Inc. is protesting that the tax rise would be ''regressive'' because the burden would fall heaviest on those with the least money. Doubling the tax rate does not mean doubling tax receipts, says a spokes-woman, since some people may stop smoking altogether.
Opponents of doubling the federal cigarette tax also charge that the federal government would be moving into an area now dominated by states. Sen. John P. East, a Republican from the tobacco state of North Carolina, has made the argument that the federal government would be usurping state taxing power.
While federal taxes on a pack of cigarettes have held steady, most state and local governments have tacked on revenues of up to 25 cents, which have been a major source of funding for them.
Pointing to these increases, the Tobacco Institute calls their products ''overtaxed.'' In fact, cigarette taxes are lower by percentage now than in the 1950s. In 1954, for example, the average price of a pack of cigarettes was 23 cents, and taxes made up 48 percent of that cost. In 1981 the average cost was 70 cents, and taxes dropped to 30 percent of the price.
''It's amazing that it (the federal tax on cigarettes) has not been raised,'' says Matthew Myers, director of the Coalition on Smoking or Health, an antismoking lobby organized by major health groups.
Assessing the power of the tobacco interests on Capitol Hill, he called them ''nowhere near as effective as they would like to believe and a lot more effective than the American public realizes.''
Not only do tobacco lobbyists pay frequent visits to congressional offices, but their political action committees (PACs) pour in sizable contributions to election campaigns. According to findings by Common Cause, those PACS gave $89, 000 for Senate and $152,000 for House candidates in 1979-80.
The PACs frequently target members in key posts for donations. Ironically, one of their biggest recipients was Senator Dole who got $3,500 from tobacco-related groups and is now pushing for the cigarette tax hike.
Mr. Myers points to the Dole plan as evidence that the antismoking forces are stronger now. However, the tax increase, like the rest of the Dole bill, is still far from passage, and House members have traditionally opposed such excise taxes.
A House Democratic aide gives the measure at least a fighting chance because with cigarettes ''you've got a health argument.'' And an aide to Republican leader Robert H. Michel of Illinois says that Representative Michel has not ruled out the cigarette tax, although he generally opposes excise taxes.
Much less likely before next fall's election would be a companion tax raise in alcohol. Although alcohol is still taxed at 1950s rates, Congress has so far been unwilling to touch that commodity, and the Senate Finance Committee made no public move in that direction.
''There are more difficulties with alcohol than with tobacco,'' says a Senate aide who works on tax issues. More people would be affected, and taxes already make up a high percentage of the purchase price, he says.
According to the Distilled Spirits Council of the US (DISCUS), taxes make up 48 percent of the cost of the average bottle of liquor, only slightly less than the 51 percent rate in 1952. However, beer and wine are taxed at a far lower federal rate than liquor. Federal taxes (not counting state and local revenues) total about 3 cents for a 12-ounce can of beer and less than 1 cent for a 5 -ounce glass of wine.
''There has never been a lobby for higher alcohol taxes,'' says Michael F. Jacobson, executive director of the Center for Science in the Public Interest. His group is trying to put together such a movement. It is pushing for overhauling the alcohol tax system and tripling the rates.
Opponents, including the distiller's association, say that such increases would hit poor people unfairly.
To that charge, Jacobson says, ''It would not have any effect on poor people who did not drink. He maintains that time lost at work, drunken driving, and other alcohol-related problems cost the nation about $100 billion a year.
Joseph A. Califano Jr., a former secretary of Health, Education, and Welfare, recently made a similar point in a report to New York Gov. Hugh L. Carey. ''The time has come for alcohol to bear its fair share of the tax burden,'' he writes in calling for earmarking alcohol taxes for alcohol-related services.
So far, no one on Capitol Hill has openly backed increasing alcohol taxes. But warning signs are out for next year, when Congress again faces a big budget deficit.