By Scott Wilson
Washington Post Staff Writer
Wednesday, December 16, 1998; Page B01

A divided Montgomery County Council yesterday imposed a new tax on tobacco products to pay for anti-smoking programs, as members squared off over whether the action would reduce smoking among children or just place new burdens on local business owners.

By a one-vote margin, council members made Montgomery the first jurisdiction in the state to impose a local tax on tobacco products other than cigarettes. State law prohibits local jurisdictions from taxing cigarettes, but anti-smoking activists said they hoped state lawmakers would follow Montgomery's lead and impose their own higher levy on cigarettes.

The county's bill imposes an excise tax of 3 or 6 cents per cigar, depending on its size, and 36 cents per 1.5 ounces of snuff, pipe tobacco or loose-leaf cigarette tobacco. Chewing tobacco will be taxed at 36 cents per 3 ounces.

A five-member council majority and County Executive Douglas M. Duncan (D) celebrated the new tax as the best way to raise money for education programs designed to reduce youth smoking. They cited studies showing that a 10 percent increase in the price of tobacco products results in a 4 percent drop in the number of users.

But four dissenting council members joined local business owners in warning that the tax will effectively drive customers to neighboring counties or to the District to buy cigars, snuff or pipe tobacco. Shop owners either will have to raise their prices to cover the new tax or suffer lower profit margins.

"They're making it very easy for me to move my whole operation to Virginia," said Bart Sims, who owns two J.B. Sims Fine Tobaccos shops in Montgomery and who attended several council hearings on the tax. "The people on the council don't have the first clue about business. They are a bunch of incompetent idiots."

Duncan introduced the tobacco tax bill in June and since then has criticized council members for proceeding slowly on a measure he says will save lives. The new charge will raise an estimated $405,000 for the county each year, about half of which will be used to administer the tax.

"I'm just pleased they passed the tax," Duncan said. "The whole point is to raise revenues to educate our children about the dangers of tobacco. In 20 years, hopefully, they will all be healthier as a result."

County health officials will use proceeds from the tax to pay for education efforts in middle and high school classrooms. They have set goals of reducing cigarette smoking by 25 percent among 8th- 10th-, and 12th-grade students by 2004, and decreasing the number of 12th-grade smokeless tobacco users by the same amount.

Several council members who opposed the tax recalled the county's experience with the "beverage container" charge, a 3- to 6-cent tax on cans and bottles. Montgomery became the only Maryland county to impose the tax in 1978, but subsequent studies showed that county residents were buying their beer and soft drinks elsewhere to avoid the additional charge. At Duncan's urging, the council repealed the tax in 1995.

"It is a dysfunctional way to tax," said council member Michael L. Subin (D-At Large), who proposed using money from the county general fund to pay for the anti-smoking programs.

Subin was joined by council members Marilyn Praisner (D-Eastern County), Nancy Dacek (R-Upcounty) and Betty Ann Krahnke (R-Potomac-Bethesda) in opposing the tax. Council members Isiah Leggett (D-At Large), Philip M. Andrews (D-Rockville), Blair G. Ewing (D-At Large), Derick Berlage (D-Silver Spring) and Steven Silverman (D-At Large) supported it.

In June, the county will send tobacco vendors new tax forms to fill out each month and return with a tax payment. The first bill will be due July 25, and four auditors will be hired to enforce what is mostly an honor system.

A manager at Capital Classics in Silver Spring said he will have to reprice 15,000 cigars to make it easier for him to collect what he owes the county.

Sims said he sells 140 cigar brands, each in four different sizes. He said repricing them will take hundreds of hours.

"I raised a family on this, and now they are trying to put me out of business," Sims said. "It makes me sick."