The Republican-controlled Senate Finance Committee, defying the Reagan administration's policy against tax increases, voted unexpectedly yesterday to raise the federal cigarette tax from 16 to 24 cents a pack to help meet next fiscal year's deficit target.
But the Democratic-led House Ways and Means Committee rejected, 28 to 4, a proposal to raise the cigarette levy by 8 cents a pack, with members complaining it was unfair to single out one industry for higher taxes without further study.
Spurred by concern over smoking's effect on health and by a desire for new revenues to help curb deficits, Congress raised the tax from 8 to 16 cents on a temporary basis four years ago. Only a few months ago, it voted as part of another deficit-reduction measure to make the 16-cent levy permanent.
"I think we'll have a battle on the floor," said Senate Finance Committee Chairman Bob Packwood (R-Ore.), who opposed the increase on grounds that the tobacco industry should not be hit twice in one year.
Tobacco-state lawmakers such as Sen. Jesse Helms (R-N.C.) supported the earlier extension only because it was linked to a new subsidy program backed by the tobacco industry.
They could be handicapped in trying to block the new move because it will be included in budget "reconciliation" legislation that is protected on the Senate floor against filibusters and other delaying tactics.
The increase, proposed by Sen. John H. Chafee (R-R.I.) and approved 11 to 8, would bring in an estimated $5 billion over three years. The cigarette levy supplants an earlier proposal to continue the federal telephone excise tax and raise it from 3 to 4 percent, which would have raised about $4 billion. The committee indicated it would let the telephone levy expire as scheduled at the end of next year.
"Telephones are a true necessity; cigarette smoking is not," Sen. John C. Danforth (R-Mo.) said in voting to substitute the cigarette tax increase for the phone tax.
As the Senate committee was approving the cigarette tax increase, the House panel approved other spending and revenue measures, including an extension of the 3 percent telephone tax through 1989.
Ways and Means also approved legislation to require payment of aid to families with dependent children (AFDC) benefits to two-parent families if the father is unemployed and to pay Social Security cost-of-living increases regardless of the inflation rate. Current law provides for no increases if the inflation rate falls below 3 percent.
After defeating the cigarette tax, Ways and Means last night approved a package of tax changes and Medicare cuts that would reduce the deficit by a net of $11.7 billion over three years.
The Finance Committee, as expected, voted to extend the Medicare payroll tax to state and local government workers who do not already pay it, a move that would raise $825 million next year and $5 billion over three years. But the House panel rejected the proposal by voice vote.
The committee actions came as the Senate opened debate on legislation to repair automatic enforcement provisions of the Gramm-Rudman-Hollings budget-cutting law that were struck down by the Supreme Court earlier this month.
The new legislation would empower the president's Office of Management and Budget, rather than the congressional General Accounting Office, to implement across-the-board spending cuts that are required when Congress fails to meet deficit-reduction targets specified in the law.
In earlier testimony before the Government Affairs Committee, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) urged repair of the automatic trigger for spending cuts, saying it would provide "the extra push to do what has become almost impossible because of gridlock" between the House and Senate.
Without automatic enforcement provisions, Congress will probably fail to impose cuts to reach the law's deficit target, he said. But with it, "I believe . . . we will come to our senses and do it . . . sooner or later," he said.
However, Domenici also warned that, under the proposed Gramm-Rudman-Hollings revisions, OMB could make "dramatic changes" in deficit projections affecting the amount of spending cutbacks.
He cited $4.2 billion in advance farm payments that OMB would probably not count against the deficit, even though Congress will probably insist that they be paid.
But Sen. Phil Gramm (R-Tex.), one of the chief sponsors of the original legislation, played down the significance of OMB discretion in carrying out the law, saying it involved only "technical" issues that would have little impact on the substance of program cuts.