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Texas Supreme Court upholds $500M state tax on tobacco

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AUSTIN, Texas (AP) — The Texas Supreme Court has overturned a lower court decision and upheld a state tax on products made by small tobacco companies that weren’t part of a landmark 1998 settlement with Big Tobacco.

The Supreme Court in a ruling Friday determined the tax adopted in 2013 is not a violation of the Texas Constitution’s equal and uniform clause.

The tax annually generates approximately $500 million to recover health-care costs associated with tobacco-related health problems.

A state appeals court earlier sided with the smaller tobacco manufacturers in ruling that the state could not impose a tax on one group of products while not imposing the same tax on another identical group.

But Friday’s ruling countered that the clause prohibits the unequal application of taxes to people, not products.

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