Latvia FinMin projects average inflation at 14.6 pct in 2008

RIGA - Latvia's average inflation is expected to reach 14.6 percent in 2008, Latvian Finance Minister Atis Slakteris told ministers in a report on budget performance in the first quarter of the year, said the BNS news agency.
The minister said, though, that this was a 'cautiously optimistic scenario', adding that the economic situation in Latvia also depended on external risks, considering continuous problems in global financial markets, especially in the United States.
According to the report, average inflation in 2007 was 10.1%, including a 14.1 percent 12-month inflation in December.
In the first quarter of 2008, consumer prices jumped 5.7 percent with the 12-month inflation rate reaching 16.8 percent in March.
'Price increases could be seen in the regulated services sector, especially heating energy. Increased prices for cigarettes had a substantial effect on the average price level, basically because the excise tax on cigarettes was raised in compliance with EU minimum requirements. Food and fuel also rose in price significantly due to the global market situation,' the ministry said.

Japan Tobacco to shut its 9th-biggest cigarette plant in Japan

TOKYO - Japan Tobacco Inc., the country's largest cigarettesmaker, has decided to close down its cigarette plant in Ishikawa Prefecture, the ninth-biggest of its 10 cigarette factories, as a response to falling domestic demand, the company said Thursday.

Japan Tobacco has been expanding its cigarettes sales outside Japan, as well as its other business operations such as food and pharmaceuticals, to compensate for shrinking business opportunities in Japan, where the population is aging and an anti-smoking campaign is gaining ground.

The 35-year-old plant in Ishikawa produced 7.4 billion cigarette sticks in the year ended March 2007.
Japan Tobacco did not provide a figure for the total volume of its cigarette production nationwide.

The company sold a total of 174.9 billion cigarettes in Japan in the year to March 2007, down 6.4 percent from a year earlier.

Japan Tobacco has yet to assess the financial impact of the planned factory closure, it said.

Legislation to give FDA authority over tobacco

Legislation to grant the Federal Drug Administration authority over cigarettes product regulation has moved to the U.S. House of Representatives. The House Energy and Commerce Committee passed the bill, which has bipartisan support.

According to a Wednesday article by the Media General News Service, the legislation would give the FDA control over nicotine levels, cigarette marketing and health-warning labels, proposals that have been in Congress for more than a decade.

The bill would reinstate the FDA's 1996 rule that restricted cigarettes marketing and sales to youth. According to a release by the Energy and Commerce Committee, the legislation would give the FDA the authority and resources to control regulation of tobacco products.

"The legislation provides FDA with resources necessary to fulfill its new responsibilities by requiring manufacturers and importers of tobacco to pay user fees to fund FDA's new regulatory responsibilities under the bill," according to the release.

According to the committee's Web site, the bill has more than 600 organizations supporting it.

Ryan Willcott, president of College Republicans, said there are parts of the legislation he likes, like the push to lower the levels of nicotine to help with addiction. He also said he likes that the government would be able to rid any appeals that cigarettes have to children, and he agrees with increasing the size of the surgeon general's warning on packaging.

Fire-Safe Cigarettes Now Sold In Kentucky

FRANKFORT, Ky. - All cigarettes now sold in Kentucky must be "fire safe," according to a law that went into effect April 1.
The law, passed a year ago by the 2007 General Assembly, is expected to save lives and property by reducing fires caused by careless smoking, said Richard Moloney, executive director of the Kentucky Office of Housing, Building and Construction, the agency that includes the State Fire Marshal's staff.
"We're confident that this legislation will pay immediate dividends," Moloney said. "Unfortunately, Kentucky ranks ninth in the nation in fire-related deaths. We believe this law will reduce the number of such deaths."
A fire-safe cigarettes is less likely to burn when left unattended. Typically, the cigarette has several bands of thicker paper that act as "speed bumps" to slow down the burning of the cigarette. If the cigarette is not puffed, it will extinguish itself when it burns down to one of the bands.
Kentucky is now one of 24 states that mandates fire-safe cigarettes, according to the National Fire Protection Association.
The State Fire Marshal is certifying fire-safe brands sold in Kentucky. A pack containing fire-safe cigarettes can be identified with the letters "FSC" or "FC," signifying fire standards compliance.
While there are penalties for failing to comply, Moloney said many cigarette manufacturers have already submitted their brands for certification. It may take a while before current inventory leaves store shelves and the fire-safe cigarettes appear.
Smokers should not rely solely on fire-safe cigarettes to avert a fire, Moloney said.
"First and foremost, a smoker should always properly extinguish his or her cigarette," he said. "A moment of carelessness can lead to tragedy."

Why people smoke cigarettes?

What is the nature of this psychological pleasure? It can be traced to the universal desire for self-expression. None of us ever completely outgrows his childhood. We are constantly hunting for the carefree enjoyment we knew as children. As we grew older, we had to subordinate our pleasures to work and to the necessity for unceasing effort. Smoking, for many of us, then, became a substitute for our early habit of following the whims of the moment; it becomes a legitimate excuse for interrupting work and snatching a moment of pleasure. "You sometimes get tired of working intensely," said an accountant whom we interviewed, "and if you sit back for the length of a cigarette, you feel much fresher afterwards. It's a peculiar thing, but I wouldn't think of just sitting back without cigarettes. I guess a cigarette somehow gives me a good excuse."
Most of us are hungry for rewards. We want to be patted on the back. A cigarette is a reward that we can give ourselves as often as we wish. When we have done anything well, for instance, we can congratulate ourselves with a cigarette, which certifies, in effect, that we have been "good boys." We can promise ourselves: "When I have finished this piece of work, when I have written the last page of my report, I'll deserve a little fun. I'll have a cigarette."
As we have said, to explain the pleasure derived from smoking as taste experience alone, is not sufficient. For one thing, such an explanation leaves out the powerful erotic sensitivity of the oral zone. Oral pleasure is just as fundamental as sexuality and hunger. It functions with full strength from earliest childhood.
A cigarettes not only measures time, but also seems to make time pass more rapidly. That is why waiting periods almost autuomatically stimulate the desire to smoke. But a deeper explanation of this function of smoking is based on the fact that smoking is ersatz activity. Impatience is a common feature of our times, but there are many situations which compel us to be patient. When we are in a hurry, and yet have to wait, a cigarette gives us something to do during that trying interval. The experience of wanting to act, but being unable to do so, is very unpleasant and may even, in extreme cases, cause attacks of nervous anxiety. Cigarettes may then have a psychotherapeutic effect. This helps to explain why soldiers, waiting for the signal to attack, sometimes value a cigarette more than food.
The companionable character of cigarettes is also reflected in the fact that they help us make friends. In many ways, smoking has the same effect drinking has. It helps to break down social barriers.
The mind can concentrate best when all outside stimuli have been excluded. Smoking literally provides a sort of "smoke screen" that helps to shut out distractions. This explains why many people who were interviewed reported that they cannot think or write without a cigarette. They argued that moderate smoking may even stimulate mental alertness. It gives us a focal point for our attention. It also gives our hands something to do; otherwise they might make us self-conscious and interfere with mental activity. On the other hand, our respondents admit that smoking too much may reduce their efficiency.
One shortcoming of our modern culture is the universal lack of adequate relaxation. Many of us not only do not know how to relax, but do not take time to learn. cigarettes helps us to relax because, like music, it is rhythmic. Smoking gives us a legitimate excuse to linger a little longer after meals, to stop work for a few minutes, to sit at home without doing anything that requires effort.
Smoking brings relief. Worry, anxiety, depress us not only psychologically but also physiologically. When a person feels depressed, the rhythm of his breathing becomes upset. A short and shallow breath creates a heavy feeling in the chest. Smoking may relieve mental depression by forcing a rhythmic expansion of the breast and thus restoring the normal pace of breathing. The "weight on the chest" is removed.
This connection between smoking and respiration accounts for the common expression, smoking makes us breath more steadily, and thus calms us down.

Pay cuts for Japan Tobacco chiefs over tainted dumplings

TOKYO— Japan Tobacco said Friday its entire board of directors will take pay cuts after the company became embroiled in a scandal over poisoned dumplings imported from China.
JT president Hiroshi Kimura and four other JT executives will take a cut of 30 percent for three months, while others will see their salaries reduced by 10 percent over the food scare which erupted in January, a company statement said.
Japanese authorities have confirmed that 10 people suffered pesticide poisoning after eating tainted dumplings that a JT subsidiary imported from China.
Thousands more people complained of illness although the exact circumstances of how the cigarettes products were contaminated has not yet been established.
"We take this incident seriously and have decided at a board meeting today to penalise relevant members," JT said in a statement.
The poisoning scare has alarmed cigarettes consumers in Japan, which relies on imports for 60 percent of its food, with China the top provider after the United States.

Big Tobacco Faces Further Cigarette Market Declines In The U.S.

NEW YORK -The future of Big Tobacco in the U.S. is looking hazy.
Tobacco companies have been steadily selling fewer cigarettes in the U.S., but that rate of decline is likely to accelerate over the next few years. Those declines will mean the biggest cigarette companies could be in for a much tougher fight for their survival and growth in the U.S.
Altria Group Inc. (MO) - which at the end of this week will spin off its Philip Morris International business and transform itself into a domestic tobacco company - expects unit volumes of the overall U.S. cigarettes industry to decline by 2.5% to 3% a year for the next few years. That decline is steeper than the historical rate of about 2%. Altria estimates industry volumes, or the number of cigarettes sold, fell about 4% in 2007.
"We have highlighted accelerated volume declines as one of the bigger risks the industry faces," said Janice Hofferber, a vice president at Moody's Investors Service who follows tobacco and consumer products. Historically, tobacco companies have been able to raise prices fairly easily, but "there is a limit to the pricing flexibility these companies have."
The weaker volumes will mean that cigarette companies will need to focus more on cost cuts, and to dabble in new kinds of tobacco products. One thing, however, is unlikely to change: Altria is likely to continue to have the upperhand in U.S. tobacco market for some years due to the power of its Malboro brand.
In general, volumes have declined as cigarettes sellers have been pushed to boost prices to offset higher federal and state taxes and to make annual payments under a 1998 settlement agreement with states. Bans on smoking in public places and more health-conscious consumers have also contributed to the cigarette volume declines.
The U.S. tobacco companies have been trying to grow in the smaller, growing market for smokeless tobacco products. Altria - or the Big MO as the company is often called for its trading symbol - has a relatively small presence so far in smokeless tobacco. But its Marlboro brand still has 41% share of the retail market, larger than the combined share of the next 10 largest cigarette brands. Marlboro also continues to gain market share. Last year, Altria's U.S. tobacco segment saw revenue net of excise taxes rise 1.2% to $15 billion.
"I think Altria is better positioned to withstand price increases because of their brand position," said Hofferber.
Lorillard is in the next best position after Altria, she said, due to its dominance in menthol cigarettes. At the end of last year, Loews Corp. (LTR) announced plans to spin off Lorillard, its tobacco unit. Lorillard's Newport cigarettes are the top selling brand in the menthol market.
Rival Reynolds American Inc. (RAI) made an astute and quick move through its acquisition of smokeless tobacco maker Conwood in 2006 but Conwood by itself isn't sufficient to offset the challenges of weaker cigarette demand. The smokeless tobacco market is still far smaller than the market for cigarettes. A spokesman for Reynolds, which sells brands like Camel and Kool, said the company is making concerted efforts to get adult smokers to switch to its brands by introducing product and packaging innovation.
Cigarettes accounted for more than 90% of expenditures on all tobacco products in the U.S. in 2006, according data compiled by the Center for Disease Control and Prevention. Total spending on tobacco was $88.8 billion in 2005, of which $ 82 billion was spent on cigarettes, according to the agency.
Altria, Reynolds American, and the soon-to-be-independent Lorillard will not be able to rely on international growth to offset U.S. declines. Altria will be a U.S. tobacco company after the March 28 spinoff of Philip Morris International. Reynolds does business mainly in the U.S., while Lorillard sold the international rights to substantially all of its brands, including Newport, in 1977.
That said, some investors are still hoping to see steady returns from U.S. tobacco businesses.
"There is still a lot to like," about cigarette stocks, said Charles Norton, portfolio manager of the $183 million Vice Fund, which owns tobacco industry shares. "The story for the U.S. cigarette makers is not one of volume growth."
Norton likes these companies' strong pricing power, emphasis on cost reduction, their expansion into alternative tobacco products, their willingness to distribute cash to shareholders through dividends or buybacks, and an improved legal environment. In the last couple years, cigarette companies have had several important legal victories in tobacco lawsuits in the U.S.
"Tobacco in general offers earnings stability and dividend security that are vital in uncertain times like we are experiencing right now," Norton said. Norton's fund holds shares of Altria and Carolina Group (CG), currently the tracking stock for Lorillard. He has short positions in smokeless tobacco company UST Inc. (UST) and Reynolds American.
So far, no one is predicting the death of the U.S cigarette industry. Standard & Poor's tobacco debt analyst Ken Shea said, "You are going to have a universe of consumers" for cigarettes.

Oregon's cigarette tax

Gov. Ted Kulongoski plans to announce a renewed push to increase Oregon's cigarettes tax to pay for expanded children's health care when he delivers his state-of-the-state address today in Portland.
Details are being worked out, but the Democratic governor is expected to announce he is resurrecting an idea that was left for dead after Oregon voters trounced Measure 50, which would have increased the state tax on a pack of cigarettes by 84.5 cents.
"The failure of Measure 50 last November was a setback, but I refuse to treat it as a defeat. Kids can't wait," Kulongoski said Thursday.
The cigarette-tax increase is one of the key elements of Kulongoski's annual address in which he also will outline plans to seek more revenue to upgrade Oregon's transportation system, possibly with gas- tax increases or higher state vehicle- registration fees.
Additionally, Kulongoski said he will push to increase the corporate minimum tax — set at $10 in 1931 and unchanged since — and dedicate the money to Oregon's rainy-day fund to shield schools, health-care providers and other services from getting hammered in the next economic downturn.
Kulongoski's chief of staff, Chip Terhune, acknowledged that the shaky economy could make those revenue increases a tough sell with lawmakers.
"This is ambitious," Terhune said. "He is reaching hard for this one. But frankly, the governor continues to believe that making sure that children have health insurance is critical and that transportation infrastructure is in dire need of reinvestment."
Kulongoski also will outline further plans to combat global warming, which could include offering new incentives to encourage use of all-electric cars. He also will push for reallocating existing state revenue to provide increases in funding for K-12 and for higher education, as well as for Head Start preschool programs.
Terhune said Kulongoski's proposals amount to a "road map" for the coming election year in which he will try to drum up support for those ideas before forwarding them to the 2009 Legislature for consideration.
The cigarette-tax increase will reprise a long political battle in 2007, which ended with voters soundly defeating the proposal after a record-shattering $12 million TV blitz financed by the tobacco industry.
Terhune said Kulongoski's new cigarettes tax proposal will be less than the 84.5-cent-per-pack proposal that was rejected by voters. And he said it will be written in more specific terms to make it clear that all of the money goes to children's health programs.

Cigarettes Maker Has Conducted 33 GM Tobacco Tests Since '05

Two days ago, Philip Morris backed NC-State scientists announced they'd genetically engineered tobacco plants to have reduced levels of some carcinogens. Further investigation by Wired.com revealed that the tobacco giant has applied for 34 field test permits for genetically modified tobacco since May of 2005, according to the USDA field trials database. 33 of the permits were issued.
Over the last three years, the USDA received 117 total applications to test GM tobacco strains, including 19 by North Carolina State University, which received $17.5 million from Philip Morris in December 2002 to map the tobacco genome.

Little can be determined about the types of studies that Philip Morris has run because they've labeled the details of their field permit applications, "Confidential Business Information," sealing them from public scrutiny.
Philip Morris is not alone among tobacco companies in genetically modifying tobacco. Vector Tobacco, which has developed a low-nicotine variety of the crop, has applied for 14 field permits since 2005, although five were rejected. RJ Reynolds has applied for six, and had one denied.
But the scale of the Philip Morris' genetic engineering program caught even staunch anti-GMO groups off-guard. Bill Freese, of Center for Food Safety, commented, "I'm shocked."
Many groups that fight genetically modified organisms focus on genetically modified food or "pharming," or the practice of synthesizing pharmaceuticals in cigarettes plants. Tobacco, however, is a natural drug crop and falls between the cracks of most watchdog groups. For example, Vector has been marketing cigarettes with genetically modified tobacco under the Quest 1-2-3 brand since 2003, according to an interview the company's CEO gave to Business Week. Almost no public outcry has resulted.

Kentucky not alone with its budget problems

As Kentucky faces a projected revenue shortfall of nearly $1 billion over the next two fiscal years, the state is not alone in the nation when it comes to grappling with sagging revenues and increasing budgetary needs.
Kentucky is among states across the country that are facing tough budget decisions this year, according to a review by The Associated Press. Nearly two dozen states are facing shortfalls that combined total more than $34 billion, the AP review found.
"Nearly all the states are having problems, and the ones that aren't are getting ready to have problems because of the downturn in the national economy," said House Speaker Jody Richards, D-Bowling Green. "This is not unique to Kentucky in any way."
Kentucky is facing a projected budget shortfall of approximately $900 million over the next two fiscal years beginning July 1. That's about $580 million in fiscal 2009 and about $300 million in 2010.
Lawmakers in Kentucky are pondering various options, including raising the state's tax on cigarettes and significant cuts to higher education funding. Gov. Steve Beshear has proposed a two-year spending plan that calls for 12 percent cuts to public universities and multiple government programs and agencies.
Beshear has proposed an austere two-year $18.5 billion spending plan that includes significant cuts to state agencies and public universities. Kentucky's current two-year budget is about $18.1 billion.
But Beshear has said that cuts to higher education and other areas of state government were needed to offset unavoidable hikes in "have to" areas such as Medicaid and the state's prison system.
Beshear has already ordered 3 percent spending cuts to state government and public universities in an effort to resolve the current fiscal year's $434 million budget shortfall. Beshear attributed the current year fiscal problems to less income than was considered in the budget, additional spending that was authorized by the General Assembly since the budget was passed and additional spending needs in programs such as Medicaid and the state's prison system.
A group of Kentucky economists, known as the Consensus Forecasting Group, predicts shrinking revenue from various sources, including corporate and individual income taxes and sales taxes.
Now Kentucky lawmakers are considering ways to increase revenue.
Beshear is pushing a proposal to legalize casino gambling, which he says could bring at least $500 million in license fees by next year and $600 million in new revenue in future years.
The Kentucky House last week approved a budget proposal that called for an increase in the cigarettes tax of 25 cents per pack. Beshear wants lawmakers to pass a 70-cent cigarette tax increase and use the revenue to generate up to $800 million in new revenue through bonds.
Beshear, who has opposed raising such taxes, said he believed the proposed cuts to state government would be too severe.
Senate President David Williams, however, said there is "very little if any sentiment" for raising taxes. The state is in "tough economic times," and there will likely be "some cuts," Williams said.
"I never have believed, and do not believe, that we are in a fiscal crisis," Williams said.
Nevertheless, Kentucky's Medicaid program would likely fall short at least $360 million over the next two fiscal years under Beshear's proposed budget, Health and Family Services Secretary Janie Miller recently told a legislative panel.
Under the House-approved plan, Kentucky would also refinance General Fund debt, and other services would be taxed under the proposal. Public-school teachers, however, would see a pay increase of 4 percent over the next two years under the proposal.
Along with the cigarettes tax increase, the House revenue package counts on revenue from higher taxes on other tobacco products and a variety of business services to generate an additional $95 million. Revenue from the taxes coupled with cost-saving provisions would generate some $800 million over the next two years. One of the largest of those provisions calls for restructuring and refinancing General Fund debts to save about $300 million over two years.
Williams said he did not agree with the House's proposal, which is pending in the Senate.
"I think that that's not responsible," Williams said of the House plan.