Texas Ready to Tax Tobacco Billboards

10 percent charge spurs free-speech debate

If Joe Camel and the Marlboro Man want to keep smoking on billboards in Texas, they're going to have to pay extra.

Last month, Texas became the first state to move toward levying a tax on tobacco billboards. Lawmakers agreed on a bill that would slap a 10 percent surcharge on all outdoor tobacco ads.

The bill, which Gov. George W. Bush is expected to sign into law, would raise some $6 million per year to fund tobacco education classes for teenagers. And it is part of a legislative effort to reduce teen smoking.

Supporters of the new law, including the Texas Medical Association and the American Cancer Society, say the surcharge could provide a middle ground for states wanting to reduce tobacco advertising without calling for an outright ban.

Nationwide, the tobacco industry buys some $240 million worth of billboard advertising every year, according to the Federal Trade Commission.

In Texas, 5 to 8 percent of billboards in the state carry tobacco advertising, estimates Bill Horn, general manager of the Austin office of Reagan National Advertising, which specializes in outdoor ads. "Larger markets like Dallas or Houston will carry a higher percentage than that," says Mr. Horn, who adds that he's unsure how the new law will affect his business.

But the surcharge has industry officials smoldering over what they believe is an infringement of their constitutional rights.

A 'tax on free speech'?

Tom Lauria, a spokesman for the Tobacco Institute, calls the billboard surcharge "a tax on free speech. If it is implemented and signed into law, it could very well be challenged in court on that basis," he says.

Sen. Judith Zaffirini a Democrat from Laredo, who wrote the bill anticipates litigation on the surcharge. "We always expect a challenge from the tobacco industry," she says, adding that the surcharge was not her primary goal. "I would rather ban billboards," says Senator Zaffirini. "That would be wonderful."

Utah is the only state that prohibits outdoor advertising of tobacco products. Its law has been in place for more than six decades.

Six other states and the District of Columbia have some restrictions on tobacco billboard advertising.

Baltimore's ad ban

But besides Utah, no state has gone as far as the law now in effect in the city of Baltimore, which prohibits alcohol and tobacco advertisements in residential areas.

According to Baltimore city attorney Burton Levin, more than half of the billboards currently displaying tobacco or alcohol ads will be prohibited from taking such ads in the future.

In April, the US Supreme Court upheld the legality of Baltimore's statute. Since then, similar ordinances have been proposed in Los Angeles, Harrisburg, Penn., and Warren, Mich. And on May 29, Cleveland Mayor Michael White introduced a billboard ordinance modeled after the Baltimore law.

At the heart of the tobacco advertising question is the issue of free speech.

Don Garner, a law professor at Southern Illinois University, who helped the city of Baltimore defend its law in federal court, contends there is a difference between commercial speech, like advertising, and the free speech expressed by individuals.

Mr. Garner says federal courts have shown less willingness to protect commercial speech. And he adds that if cities like Baltimore can ban billboards, "then they can surely put a tax on them in Texas."

Mr. Lauria says the tobacco industry will fight for the right to advertise on billboards. "It's a clear cut case of censorship by local communities," he says.

"This has got to be a concern to people outside the tobacco industry, unless you feel that erosion of First Amendment rights is acceptable."

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