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TOBACCO INDUSTRY PAYMENT OPTIONS Option Rationale 1. Settlement as Agreed upon, hard negotiated compromise that would raise prices Proposed and provide funds to cut smoking. 2. Tough Youth Would provide much tougher youth smoking penalty and could raise Smoking Penalties substantial revenues if targets aren't met. 3. Restore Promised Since AG settlement didn't take into account income tax and other Investment offsets, raise payments enough so that the US government can make Revenues the level of health investments originally promised. 4. $1.50 per Pack Raise prices enough to cause a sharp drop in smoking. (Prices would still be lower than in many countries.) Raise revenues substantially. DRAFT of 9/11/97 11:43 PM TOBACCO INDUSTRY PAYMENT OPTIONS.dec