Firms fighting cig tax

A Mississippi cigarette distribution company and a Kentucky manufacturer want to nix a state law that taxes their cigarettes sold out of state.
In a complaint filed in Hinds County Chancery Court against the State Tax Commission, The Corr-Williams Co. and Commonwealth Brands Inc. said the 1 1/4-cent-per-cigarette fee on smokes sold out of state violates the U.S. Constitution by unfairly taxing interstate commerce.
The companies are not challenging taxes collected on cigarettes sold in state.
The tax in question - which equates to about 20 cents a pack - went into affect in July and applies to manufacturers not included in the state's 1997 tobacco settlement.
Last month, the state billed 20 manufacturers $537,499, said Kathy Waterbury, a spokeswoman for the State Tax Commission. Those first payments are due Thursday.
In the complaint, the companies ask the state be prevented from collecting the fee.
Because it is pending litigation, Waterbury would not answer questions about the lawsuit.
Roy Wilkey, an attorney for Commonwealth, did not return calls seeking comment.
In its complaint, the Bowling Green, Ky.-based company alleges it's being taxed twice on cigarettes distributed through the state.
Commonwealth was not sued by the state and is not a part of Mississippi's tobacco tax settlement. The company voluntarily joined a settlement agreement with 46 other states, a group that does not include Mississippi.
In the agreement with other states, Commonwealth pays taxes based - in part - on all of its sales, including those in Mississippi.
In May, Philip Morris' parent company, Altria Group, wanted to see smaller companies taxed, an effort to level the playing field between big tobacco and its lesser-known competitors.
In June, Gov. Haley Barbour said it would be fair to add a tax to smaller companies not included in the state's tobacco settlement.
Before becoming governor, Barbour was a Washington lobbyist for premium brand cigarettes.
Commonwealth said that 80 percent of its cigarettes distributed through Mississippi are destined for other states.
Steve Carmody, attorney for Corr-Williams, said so far the tax has had little affect on sales, but the potential to affect them is great.
The Corr-Williams Co., which is based in Pearl, has warehouses in Columbia and Natchez and distributes tobacco and grocery products in Mississippi and Louisiana.
Senate Finance Committee Chairman Dean Kirby, R-Pearl, said he will check with attorneys at the Capitol to see what other states have done.