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Pa. to fight costly ruling in tobacco tax dispute

Marc Levy, Associated Press

HARRISBURG, Pa. (AP) -- The Pennsylvania attorney general's office plans to challenge an arbitration decision in a fight over the collection of taxes on tobacco products that threatens to blow a $170 million hole in the state budget next year.

First Deputy Attorney General Adrian King said the request to reconsider the Sept. 11 decision would be filed Tuesday.

The long-running dispute has drawn in the last three attorneys general and involves whether Pennsylvania appropriately collected taxes on 2003 sales of certain tobacco products.

Tobacco companies in the dispute agreed to a 1998 pact that requires them to pay states for the costs of health care for smokers. Those companies are challenging whether Pennsylvania appropriately collected taxes from the sales of products made by competitors that didn't join the pact.