MARVIN MANDEL, Governor

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made to the corporate income tax, and the collateral
inheritance tax was increased from 7-1/2% to 10%.

On April 11, 1975 - four days after the General
Assembly adjourned — I received a copy of a press release
issued by you after consultation with the House
leadership, calling attention to the inequities of the
two cent increase in the cigarette tax, and requesting
that I veto the bill. This request, and the grounds for
it were repeated at a meeting with the House and Senate
leaders held a few days later.

The concerns which you, and other members of the
General Assembly, expressed are, in my judgment, valid.
I agree with you that an increase of only two cents in
the cigarette tax as a method of funding the increased
State aid for police protection, is most unwise.

Although there is some dispute as to the exact
amount, it is clear that a significant percentage of all
the cigarettes sold in Maryland are dispensed through
vending machines. It is probable that, given the
practical difficulties in refunding pennies, the price of
cigarettes sold through machines will increase by a
nickel a pack, the unlikely alternative being for the
cigarette marketers to absorb the two cent tax. If, as
expected, the price on these sales is increased five
cents a pack, the tobacco dealers and distributors will
reap a windfall of nearly three cents a pack, with the
consumer bearing the full five cent burden at a time when
he can ill afford it. Whether similar increases will be
effected for over-the—counter and carton sales is
conjectural, but certainly possible. Mr. Lawrence D.
Shubnell, Director of the Division of Budget Review,
Department of Fiscal Services has estimated that the
dealers and distributors would gain a windfall profit of
$7,380,000 from the bill.

These considerations caused me to announce that I
would veto House Bill 1170 and call the General Assembly
into Special Session to reconsider the method of funding
this needed appropriation. To its credit, the General
Assembly, in Special Session, swiftly enacted Senate Bill
2, which re—enacted the appropriation and funded it on a
more equitable basis.

Because the enactment of Senate Bill 2, which I have
signed into law today, has made it unnecessary for me to
sign House Bill 1170, I have vetoed it.

Sincerely,

/s/ Marvin Mandel

Governor