DEMS REJECT TERROR LINK TO CIGARETTE TAX STATE LAWMAKERS PUSHING FOR BUTT-CLEANUP FUNDING.

Byline: Steve Geissinger Staff Writer

Liberal Democratic legislators from Los Angeles and Northern California on Wednesday flatly rejected Bush administration anti-terrorism concerns about higher cigarette taxes, vowing to push ahead with environmentalists' butt-cleanup bills.

Assembly members Fran Pavley, D-Woodland Hills, and Paul Koretz, D-West Hollywood, were among lawmakers who held a news conference responding to U.S. officials saying they want to head off the legislation because higher cigarette costs would fuel smuggling that is becoming a primary source of terrorists' funds.

``I don't think there's a lack of illegal opportunities for terrorists and others that want to engage in that kind of activity to make their money,'' said Koretz, a co-author of the bill. ``One way or another they will find a way to engage in illegal activities and to raise money for what they are trying to do.''

``This is a legitimate fee,'' said Pavley. ``I don't think a minor fee on cigarettes is unreasonable.''

Pavley's bill and a companion measure in the upper house, authored by Sen. Wes Chesbro, D-Santa Rosa, would impose new fees on cigarette makers and distributors to raise funds for litter cleanup - a cost of about a dime that would be tacked onto the already heavily taxed cost of the product in California.

``We're not going to stop addressing public health and the environment in California because of terrorists,'' Chesbro said.

A San Francisco Bay Area lawmaker, who is pitching a direct cigarette tax increase, did not appear Wednesday, saying he is concerned enough about the terrorism link to ``monitor'' discussion of it.

Federal anti-terrorism agents and U.S. investigative agencies said the cumulative effect of cigarette tax hikes in some states such as California are making it even more profitable for terrorist groups to smuggle in cigarettes from low-tax states or other countries.

The activity may surpass drug sales as a prime source of funds for terrorists in the United States, according to the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and the U.S. General Accounting Office, which quoted numerous intelligence agencies in two recent reports.

If states ``raise the tax on cigarettes,'' it widens the difference between the wholesale and retail prices and ``inadvertently creates opportunity for traffickers, who evade the tax and gain the profits,'' said ATF agent William Billingslea in a lengthy article last month for Police Chief magazine, published by the International Association of Chiefs of Police in Washington.

Federal officials said they are not taking stands against specific bills in states, however.

The author of a measure in the California Legislature that would directly impose a tax hike on cigarettes to help fund health programs for poor children, Sen. Tom Torlakson of Concord, did not give fellow lawmakers a reason for skipping the news conference but told a reporter through an aide he had a scheduling conflict.

Though Torlakson has long supported ``non-smoking programs,'' he also ``strongly supports homeland security and anti-terrorism efforts,'' said spokesman Robert Oakes.

``He (Torlakson) will continue to monitor discussion of these issues,'' Oakes said.

Steve Geissinger, [phone]

sgeissinger(at)angnewspapers.com