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Texas Supreme Court Upholds Tax On Small Tobacco Companies For Healthcare Costs

The Texas Supreme Court on Friday upheld a $500 million tax on small tobacco companies that goes toward offsetting the healthcare costs associated with using tobacco.

A lower court had spiked the state tax, which was adopted in 2013. The state appealed further, getting the case in front of the Texas Supreme Court. The tax levies a 55-cent fee on each pack of cigarettes that is produced by a small manufacturer. These small companies filed suit, arguing that it breaks the state law because large companies are exempt. Texas has what’s known as an “Equal and Uniform Clause” which mandates that taxes on like items must be the same across the board.

Justice Don Willett didn’t find that to be the case here, as the tax is targeted at the companies and not the product. And besides, the larger tobacco companies were ordered to pay $500 million to Texas each year for not presenting the true health risk associated with cigarettes as well as targeting minors.

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