[Congressional Record Volume 144, Number 27 (Friday, March 13, 1998)]
[Senate]
[Pages S1948-S1949]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mrs. Boxer, and Mr. Chafee):
  S. 1755. A bill to amend the Internal Revenue Code of 1986 to 
disallow tax deductions for advertising, promotional, and marketing 
expenses relating to tobacco product use unless certain advertising 
requirements are met; to the Committee on Finance.


 the children's health preservation and tobacco advertising compliance 
                                  act

  Mr. REED. Mr. President, I rise today to formally introduce 
legislation that would amend the Internal Revenue Code to deny tobacco 
companies any tax deduction for their advertising and promotional 
expenses when those ads are aimed at America's most impressionable 
group, children.
  This bill addresses a key element in our ongoing public debate on 
tobacco: the industry's ceaseless efforts to market to children. My 
legislation can stand on its own, or can easily be incorporated into a 
comprehensive tobacco bill. With or without congressional action on the 
state attorney generals' tobacco settlement, it is time for Congress to 
put a stop to the tobacco industry's practice of luring children into 
untimely disease and death.
  I am pleased to be joined today in introducing this legislation with 
Senators Boxer and Chafee, and I urge the rest of my colleagues to join 
us in this effort to protect America's children.
  Mr. President, I ask unanimous consent that the full text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1755

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Children's Health 
     Preservation and Tobacco Advertising Compliance Act''.

     SEC. 2. DISALLOWANCE OF TAX DEDUCTIONS FOR CERTAIN 
                   ADVERTISING, PROMOTION, AND MARKETING EXPENSES 
                   RELATING TO TOBACCO PRODUCT USE.

       (a) In General.--Part IX of subchapter B of chapter 1 of 
     subtitle A of the Internal Revenue Code of 1986 (relating to 
     items not deductible) is amended by adding at the end the 
     following:

     ``SEC. 280I. DISALLOWANCE OF DEDUCTION FOR CERTAIN TOBACCO 
                   ADVERTISING, PROMOTION, AND MARKETING EXPENSES.

       ``(a) In General.--No deduction shall be allowed under this 
     chapter for any taxable year for any expenditure relating to 
     advertising, promoting, or marketing tobacco products if such 
     advertising, promoting, or marketing, or such expenditure is 
     prohibited under the following subsections.
       ``(b) Prohibition of Certain Advertising.--
       ``(1) Prohibition on outdoor advertising.--
       ``(A) In general.--No manufacturer, distributor, or 
     retailer may use any form of outdoor tobacco product 
     advertising, including billboards, posters, or placards.
       ``(B) Stadia and arenas.--Except as otherwise provided in 
     this section, a manufacturer, distributor, or retailer shall 
     not advertise tobacco products in any arena or stadium where 
     athletic, musical, artistic, or other social or cultural 
     events or activities occur.
       ``(2) Prohibition on use of human images and cartoons.--No 
     manufacturer, distributor, or retailer may use a human image 
     or a cartoon character or cartoon-type character in its 
     advertising, labeling, or promotional material with respect 
     to a tobacco product.
       ``(3) Prohibition on advertising on the internet.--No 
     manufacturer, distributor, or retailer may use the Internet 
     to advertise tobacco products unless such an advertisement is 
     inaccessible in or from the United States.
       ``(4) Prohibition on point of sale advertising.--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, no manufacturer, distributor, or retailer may use 
     point of sale advertising of tobacco products.
       ``(B) Adult only stores and tobacco outlets.--Subparagraph 
     (A) shall not apply to point of sale advertising at adult 
     only stores and tobacco outlets.
       ``(C) Permissible advertising.--
       ``(i) In general.--Each manufacturer of tobacco products 
     may display not more than 2 separate point of sale 
     advertisements in or at each location at which tobacco 
     products are offered for sale.
       ``(ii) Retailers.--No manufacturer, distributor, or 
     retailer may enter into any arrangement with a retailer to 
     limit the ability of the retailer to display any form of 
     permissible point of sale advertisement or promotional 
     material originating with another manufacturer, distributor, 
     or retailer.
       ``(D) Limitations.--
       ``(i) In general.--A point of sale advertisement permitted 
     under this paragraph shall be comprised of a display area 
     that is not larger than 576 square inches (either 
     individually or in the aggregate) and shall consist only of 
     black letters on a white background or other recognized 
     typographical marks. Such advertisement shall not be attached 
     to nor located within 2 feet of any fixture on which candy is 
     displayed for sale.
       ``(ii) Audio and video formats.--Audio and video 
     advertisements otherwise permitted under this section may be 
     distributed to individuals who are 18 years of age or older 
     at point of sale but may not be played or viewed at such 
     point of sale.
       ``(iii) Display fixtures.--Display fixtures in the form of 
     signs consisting of brand name and price and not larger than 
     2 inches in height are permitted.
       ``(c) Additional Restrictions.--
       ``(1) Restriction on product names.--A manufacturer shall 
     not use a trade or brand name of a nontobacco product as the 
     trade or brand name for a cigarette or smokeless tobacco 
     product, except for a tobacco product whose trade or brand 
     name was on both a tobacco product and a nontobacco product 
     that were sold in the United States on January 1, 1998.
       ``(2) Advertising limit actions.--
       ``(A) In general.--A manufacturer, distributor, or retailer 
     may in accordance with this section, disseminate or cause to 
     be disseminated advertising or labeling which bears a tobacco 
     product brand name (alone or on conjunction with any other 
     word) or any other indicia of tobacco product identification 
     only in newspapers, in magazines, in periodicals or other 
     publications (whether periodic or limited distribution), on 
     billboards, posters and placards in accordance with 
     subsection (b)(1), in nonpoint of sale promotional material 
     (including direct mail), in point-of-sale promotional 
     material, and in audio or video formats delivered at a point-
     of-sale.
       ``(B) Limitation.--A manufacturer, distributor, or retailer 
     that intends to disseminate, or to cause to be disseminated, 
     advertising or labeling for a tobacco product in a medium 
     that is not described in subparagraph (A) shall notify the 
     Secretary of Health and Human Services not less than 30 days 
     prior to the date on which such medium is to be used. Such 
     notice shall describe the medium and discuss the extent to 
     which the advertising or labeling may be seen by individuals 
     who are under 18 years of age.
       ``(C) Action by secretary.--Not later than 30 days after 
     the date on which the Secretary receives a notice under 
     subparagraph (B), the Secretary shall make a determination 
     with respect to the action to be taken concerning such 
     notice.
       ``(3) Restriction on placement in entertainment media.--No 
     payment shall be made by any manufacturer, distributor, or 
     retailer for the placement of any tobacco product or tobacco 
     product package or advertisement--

[[Page S1949]]

       ``(A) as a prop in any television program or motion picture 
     produced for viewing by the general public; or
       ``(B) in a video or on a video game machine.
       ``(4) Restrictions on glamorization of tobacco products.--
     No direct or indirect payment shall be made, or consideration 
     given, by any manufacturer, distributor, or retailer to any 
     entity for the purpose of promoting the image or use of a 
     tobacco product through print, film or broadcast media that 
     appeals to individuals under 18 years of age or through a 
     live performance by an entertainment artist that appeals to 
     such individuals.
       ``(d) Format and Content Requirements for Labeling and 
     Advertising.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), each manufacturer, distributor, or retailer advertising 
     or causing to be advertised, disseminating or causing to be 
     disseminated, any labeling or advertising for a tobacco 
     product shall use only black text on a white background.
       ``(2) Certain advertising excepted.--
       ``(A) In general.--Paragraph (1) shall not apply to 
     advertising--
       ``(i) in any facility where vending machines and self-
     service displays are located if the advertising involved--

       ``(I) is not visible from outside of the facility; and
       ``(II) is affixed to a wall or fixture in the facility;

       ``(ii) that appears in any publication (whether periodic or 
     limited distribution) that is an adult publication.
       ``(B) Adult publication.--For purposes of subparagraph 
     (A)(ii), the term `adult publication' means a newspaper, 
     magazine, periodical, or other publication--
       ``(i) whose readers under 18 years of age constitute 15 
     percent or less of the total readership as measured by 
     competent and reliable survey evidence; and
       ``(ii) that is read by fewer than 2,000,000 individuals who 
     are under 18 years of age as measured by competent and 
     reliable survey evidence.
       ``(3) Audio or video formats.--Each manufacturer, 
     distributor or retailer advertising or causing to be 
     advertised any advertising for a tobacco product in an audio 
     or video format shall comply with the following:
       ``(A) With respect to an audio format, the advertising 
     shall be limited to words only with no music or sound 
     effects.
       ``(B) With respect to a video format, the advertising shall 
     be limited to static black text only on a white background. 
     Any audio with the video advertising shall be limited to 
     words only with no music or sound effects.
       ``(e) Ban on Non-Tobacco Items and Services, Contests and 
     Games of Chance, and Sponsorship of Events.--
       ``(1) Ban on all non-tobacco merchandise.--No manufacturer, 
     importer, distributor, or retailer shall market, license, 
     distribute, sell or cause to be marketed, licensed, 
     distributed or sold any item (other than tobacco products) or 
     service, which bears the brand name (alone or in conjunction 
     with any other word), logo, symbol, motto, selling message, 
     recognizable color or pattern of colors, or any other indicia 
     of product identification similar or identifiable to those 
     used for any brand of tobacco products.
       ``(2) Gifts, contests, and lotteries.--No manufacturer, 
     distributor, or retailer shall offer or cause to be offered 
     to any person purchasing tobacco products any gift or item 
     (other than a tobacco product) in consideration of the 
     purchase of such products, or to any person in consideration 
     of furnishing evidence, such as credits, proofs-of-purchase, 
     or coupons, of such a purchase.
       ``(3) Sponsorship.--
       ``(A) In general.--No manufacturer, distributor, or 
     retailer shall sponsor or cause to be sponsored any athletic, 
     musical, artistic or other social or cultural event, or any 
     entry or team in any event, in which the brand name (alone or 
     in conjunction with any other word), logo, motto, selling 
     message, recognizable color or pattern of colors, or any 
     other indicia of product identification similar or identical 
     to those used for tobacco products is used.
       ``(B) Use of corporate name.--A manufacturer, distributor, 
     or retailer may sponsor or cause to be sponsored any 
     athletic, musical, artistic, or other social or cultural 
     event in the name of the corporation which manufactures the 
     tobacco product if--
       ``(i) both the corporate name and the corporation were 
     registered and in use in the United States prior to January 
     1, 1995; and
       ``(ii) the corporate name does not include any brand name 
     (alone or in conjunction with any other word), logo, symbol, 
     motto, selling message, recognizable color or pattern of 
     colors, or any other indicia or product identification 
     identical or similar to, or identifiable with, those used for 
     any brand of tobacco products.
       ``(f) Definitions.--For purposes of this section--
       ``(1) In general.--Any term used in this section which is 
     also used in section 5702 shall have the same meaning given 
     such term by section 5702.
       ``(2) Brand.--The term `brand' means a variety of a tobacco 
     product distinguished by the tobacco used, tar content, 
     nicotine content, flavoring used, size, filtration, or 
     packaging.
       ``(3) Distributor.--The term `distributor' means any person 
     who furthers the distribution of tobacco products, whether 
     domestic or imported, at any point from the original place of 
     manufacture to the person who sells or distributes the 
     product to individuals for personal consumption. Such term 
     shall not include common carriers.
       ``(4) Package.--The term `package' means a pack, box, 
     carton, or container of any kind in which tobacco products 
     are offered for sale, sold, or otherwise distributed to 
     consumers.
       ``(5) Point of sale.--The term `point of sale' means any 
     location at which an individual can purchase or otherwise 
     obtain tobacco products for personal consumption.
       ``(6) Point of sale advertising.--The term `point of sale 
     advertising' means all printed or graphical materials bearing 
     the brand name (alone or in conjunction with any other word), 
     logo, motto, selling message, recognizable color or pattern 
     of colors, or any other indicia of product identification 
     similar or identical to those used for tobacco products, 
     which, when used for its intended purpose, can reasonably be 
     anticipated to be seen by customers at a location at which 
     tobacco products are offered for sale.
       ``(7) Retailer.--The term `retailer' means any person who 
     sells tobacco products to individuals for personal 
     consumption, or who operates a facility where vending 
     machines or self-service displays are located.
       ``(8) Video.--The term `video' means an audiovisual work 
     produced for viewing by the general public, such as a 
     television program, a motion picture, a music video, and the 
     audiovisual display of a video game.
       ``(9) Video game.--The term `video game' means any 
     electronic amusement device that utilizes a computer, 
     microprocessor, or similar electronic circuitry and its own 
     cathode ray tube, or is designed to be used with a television 
     set or a monitor, that interacts with the user of the 
     device.''.
       (b) Conforming Amendment.--The table of sections for such 
     part IX is amended by adding after the item relating to 
     section 280H the following:

  ``Sec. 280I. Disallowance of deduction for certain tobacco 
              advertising, promotion, and marketing expenses.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______