Smoking Groups Insisting Mayor Blow Off Tax

A platoon of elite lobbyists is preparing for political war with

Mayor Michael Bloomberg, crafting position papers, dreaming up telegenic images

and identifying legislators who may be easily swayed by well-honed arguments

and well-timed campaign contributions. The goal of all this activity is simple:

to block Mr. Bloomberg’s proposal to raise the state’s cigarette taxes from

eight cents to $1.50 per pack.

The lobbyists represent two powerful groups mobilizing to kill

the proposal, which would tax smokers to the tune of $250 million to help plug

a $4.7 billion hole in the city’s budget. One of the opponents is the tobacco

giant Philip Morris USA, which is headquartered on Park Avenue and 41st Street

and is busily crafting a lobbying counteroffensive. As if Big Tobacco weren’t a

daunting enough foe, Mr. Bloomberg’s proposal now has another adversary: a

coalition of 10,000 Dominican bodega owners and Korean greengrocers, who argue

that the tax will deal the shopkeepers a severe blow by decreasing customer

traffic in their stores.

The looming two-front war may have the makings of Michael

Bloomberg’s first real Rudy Giuliani moment, in which the Mayor morphs into a

municipal scold intent on taming tobacco merchants. Indeed, the fight over the

cigarette tax will provide Mr. Bloomberg with the first bully pulpit of his two-month-old

administration. He has given his tax proposal a moral tinge, arguing that it

would liberate children from the grip of a lethal addiction.

“I think anyone who smokes is crazy,” he observed not long ago,

adding, in an apparent reference to Mr. Giuliani’s former director of

communications, Sunny Mindel: “I heard that the former press secretary smoked.

But I would be shocked if that were

true.” (It is true, Mayor.)

To the storeowners and the tobacco executives alike, city smokers

aren’t lunatics; they’re prized customers who purchase some 350 million packs

of cigarettes a year. The shopkeepers have unfurled a banner bearing an innocuous

moniker-”Neighborhood Retail Alliance”-and they have assigned the task of

making their case to a well-connected lobbyist named Richard Lipsky. Mr. Lipsky

is something of a virtuoso at portraying his clients as economic Davids being

ground under the heel of various Goliaths. He played a key role in representing

a coalition of small shopkeepers that helped defeat a zoning plan in 1996 that

would have allowed big-box superstores to open in their neighborhoods.

“We shouldn’t balance the budget on the backs of small

businesses,” Mr. Lipsky said in an interview with The Observer . “The only people that get hurt by this tax are the

little stores that rely on tobacco sales to drive customer traffic. At the end

of the day, it will do nothing to alleviate the health concerns of New

Yorkers.”

Meanwhile, executives at Philip Morris are already formulating

their battle plan. According to sources, the company’s executives held a

conference call on Feb. 19 to plot strategy with two of the company’s top

lobbyists: Martin McLaughlin, who will lobby members of the City Council, and

Robert Malito, whose job is to influence state legislators in Albany. (Mr.

Bloomberg needs approvals from the City Council and from Albany to implement

the tax.) Neither Mr. McLaughlin nor Mr. Malito returned calls for comment.

Despite the planned counteroffensive, Mr. Bloomberg’s advisers

say that he has no intention of backing down. In addition to bringing in

much-needed revenue, he has argued, the tax will persuade many tobacco addicts

to quit rather than shell out $7 for a pack.

War on Horizon

The coming conflict will certainly enliven City Hall, setting the

stage for raucous budget hearings populated by tobacco executives, angry

merchants and nicotine-crazed smokers’ rights advocates. In an interview with The Observer , Mr. Lipsky, who is no

stranger to orchestrating such events, vowed that a telegenic and pan-ethnic

parade of shopkeepers would show up to testify before the City Council, which

holds hearings on the budget in March.

“There will be Indians and Pakistanis who own stationery stores,

Dominican bodega owners and Korean greengrocers, all of whom have a vested

interest in demonstrating to the City Council and the Mayor that this budget

gimmick is futile,” Mr. Lipsky said.

Mr. Lipsky’s willingness to parade small shopkeepers through City

Hall has already enraged some backers of the tax. They point out that the

lobbyist has frequently represented retail groups holding the same view as

Philip Morris on anti-smoking legislation, and they accuse him of tacitly

collaborating with Philip Morris in legislative fights. For instance, Mr.

Lipsky, representing a small business group, fought unsuccessfully to stop a

ban on smoking advertising near parks and schools that passed the City Council

several years ago-a law also fought by Philip Morris.

“Lipsky and the retailers have worked with Philip Morris in the

past, and we have every reason to believe that he’s fronting for Philip Morris

right now,” said Elena Deutsch, director of tobacco control at the American

Cancer Society, which supports the tax, along with several other health

organizations in New York. “They are coming together to defeat a tax that could

help save the lives of New Yorkers.” Ms. Deutsch argued that price hikes for

cigarettes are proven to reduce smoking and added that her group would help

push the measure through both the City Council and State Legislature.

Mr. Lipsky denied ever collaborating directly with Philip Morris.

“I’ve always been accused of being an affront ,

but never a front,” he said. “I don’t

front for anyone. I represent the small stores, and I’ve done it successfully

for 20 years.”

In addition to lobbying Albany politicians, Mr. Lipsky plans to

target City Council members in leadership positions, including Speaker Gifford

Miller and Finance Committee chairman David Weprin. He hopes to aggressively

lobby black and Latino Council members who preside over districts filled with

small grocery stores.

“Our stores are concentrated in the districts of black and Latino

Council members, and we are actively looking for allies among them,” Mr. Lipsky

said. “Those Council members who oppose the cigarette-tax hike will be

perceived in the small-business community as champions of their interests, and

in two years that perception will translate into active financial support.”

Mr. Lipsky will be joined in his efforts by Sung Soo Kim, the

president of the Korean American Small Business Service Center of New York,

which represents 3,500 Korean grocers.

“If people don’t pick up cigarettes, then they won’t come for

drinks, for sandwiches, for other groceries,” Mr. Kim said, adding that he

would hold a press conference at City Hall in March to advertise his group’s

opposition.

Executives at Philip Morris concede that their counteroffensive

is just in the planning stages, but they promise to be every bit as aggressive

as the small shopkeepers. “You can expect a similar approach,” said Brendan

McCormick, manager of media relations for Philip Morris USA. “We’re not going

to lay out our strategy, but we will communicate our position to elected

officials and work with anyone who shares our view.”