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    California to Reduce Smokeless Tobacco Tax

    U.S. Smokeless Tobacco said the initial excise increase was "unprecedented and illegal."


    Greenwich, Conn.-based U.S. Smokeless Tobacco Co., a maker of moist snuff and other tobacco products, said on that California has agreed to lower taxes on smokeless tobacco products after the company and other tobacco firms sued the state to reverse a hike in excise taxes on those products.

    The California State Board of Equalization, a state agency that administers tax law, has agreed to settle litigation brought against it by U.S. Smokeless Tobacco and other companies, a company spokesman told the Associated Press.

    In the suit, smokeless tobacco companies called the tax increases -- which raised prices by as much as 150 percent at the retail level -- unprecedented and illegal.

    As a result of the settlement, the excise tax on smokeless tobacco products in California will return to its original level of 52.65 percent of the wholesale price. The settlement follows a preliminary injunction awarded to the tobacco companies by the California Superior Court in Sacrament County in September.

    Also as part of the settlement, U.S. Smokeless Tobacco, whose brands include Copenhagen, Skoal, Rooster, and Red Seal agreed to pay $250,000 to the Children and Families First Coalition, the company said.

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