Tag: nicotine tax

  • Vexing Vapor Tax Dropped From Build Back Better Act

    Vexing Vapor Tax Dropped From Build Back Better Act

    Photo: cn0ra

    A proposal to impose U.S. federal taxes on vaping has been removed from the Democrats’ healthcare, education and climate change bill, reports The Wall Street Journal, citing people familiar with the matter. Nevada Senator Catherine Cortez Masto, a Finance Committee member in a tough re-election race, reportedly pushed to remove the tax and helped force its deletion.

    The removed provision would have levied a tax on vaping products designed to parallel the existing federal cigarette tax rate of $1.01 per pack.

    The move comes just days after the Vapor Technology Association (VTA) released a report that concluded the tax would cost thousands of jobs. “We have been meeting with numerous members of the House and Senate, and the Administration, to explain the absurdity of this tax, giving them multiple public health and economic reasons to strip it out of the bill,” said Tony Abboud, head of the VTA. “A tax can always come back, but if it does I doubt it will be as poorly considered as this one. There are much better alternatives.”

    The tax had draw considerable criticism from vapor industry representatives and tobacco harm reduction advocates, who said it would in some cases make e-cigarettes more expensive than combustible cigarettes—a perverse outcome, given that vaping is widely believed to be less harmful than smoking.

    Critics also noted the tax would be regressive. According to a recent Gallup poll, Americans with an annual household income of less than $40,000 are significantly more likely to vape than higher-income groups.

    Vaping advocates welcomed the decision. “The evidence is clear that imposing a new excise tax on vaping products will discourage adults from quitting smoking and shut down small businesses already dealing with industry-crushing federal regulations,” Gregory Conley, president of the American Vaping Association, was quoted as saying by The Wall Street Journal.

  • Report: Nicotine Tax Will Boost Smoking, Hurt Economy

    Report: Nicotine Tax Will Boost Smoking, Hurt Economy

    A new report finds that combustible cigarettes will become less expensive than vaping products and nearly 43,000 jobs would be lost if the proposed nicotine tax contained in the Build Back Better bill (HR 5376) were to become law. The Vapor Technology Association (VTA) funded study, The Negative Economic Impacts of the New Nicotine Tax Imposed Only on Vapor Products In the Reconciliation Bill, conducted by economist John Dunham & Associates, is being billed as a comprehensive analysis of the negative effects that the proposed tax will have on smokers, the industry and the economy.

    “Our analysis finds that the bill would not create anything close to parity with cigarette taxes but, rather, would tax vapor products at a much higher rate – up to nine times higher – than the tax on a pack of cigarettes,” the report states. “The proposed nicotine tax in the Reconciliation Bill would lead to a net price increase on vapor products at retail of about 53 percent (21.2 percent for a standard two-pack of closed-system pod products and 73.5 percent for a standard 60 milliliter bottle of open system e-liquid), while the price of cigarettes and other tobacco products would remain unchanged as they would not be subject to any additional federal tax.”

    The study also concludes that the proposed nicotine tax would lead to a reduction of nearly 42,800 full-time equivalent jobs and the loss of $2.2 billion in wages and benefits, negatively impact the size of the overall economy which would fall by about $7 billion and would result in states and their localities losing $620 million in taxes while the federal government attempts to generate revenues.

    “A pack of cigarettes contains approximately 204 milligrams of nicotine (10.2 mg/cigarette x 20 cigarettes per pack).  Applying the proposed nicotine tax of 2.78-cents per milligram to cigarettes, means that the tax on a pack of cigarettes should be $5.41, not $1.01,” the study states. “Viewed another way, the federal tax on cigarettes, if applied to their nicotine content, would only amount to less than half a penny per milligram, not the 2.78-cents Congress seeks to impose on e-cigarettes ($1.01 per pack / 204 mg of nicotine per pack).”

    As defined in the bill, the proposed tax would be equal to about $2.22 on the standard closed system nicotine vapor product (such as a two pack of JUUL pods), and a $10.01 on the standard average 60 milliliter bottle of nicotine containing e-liquid used in an open system vapor device,” according to the study.

    If passed, the proposed tax would also lead to a loss of about 31.9 percent of vapor product sales or 3.7 million milliliters of e-liquid consumed. Of this loss, 61.2 percent would be the result of consumers switching to other tobacco products, including combustible cigarettes. An additional 18.5 percent of these lost sales would move to the black market, according to the study.

    “Modeling suggests that a large portion of consumers would react by purchasing unregulated products over the black market or make their own e-liquids,” according to the study. “These figures (which reflect a price increase resulting from the tax of 53 percent) are conservative and are not out of line with other studies examining the substitution of vapor products and combustible cigarettes when taxes are imposed.”

  • House Passes Nicotine Tax Bill, Moves to Senate

    House Passes Nicotine Tax Bill, Moves to Senate

    The US House of Representatives has passed the portion of the Build Back Better Act that includes a controversial nicotine tax. The legislation will now head for the Senate. If passed, the bill would go to President Biden’s desk.generic - taxation

    In a 220 to 213 vote, the House predictably voted mostly along partly lines for the legislation that has often been compared to the New Deal. Biden signed the second piece of his domestic agenda, a $1.2 trillion package focused on infrastructure improvements, into law earlier this week. He is expected to sign the social spending section if its passed by the Senate.

    Democrats are planning on using a special budgetary process known as “reconciliation” to avoid the 60-vote filibuster threshold and pass the bill on a party-line vote, according to news reports.

    The vote was delayed last night after the record for the longest speech in the US House of Representatives was broke by Kevin McCarthy, which went on until early Friday morning. The speech surpassed eight hours of continuous floor time. Towards the end of the speech, McCarthy joked that “my one minute is almost up,” noting that “personally I didn’t think I could do that long.” He then spent some time asking those around him to confirm that he had beaten the record.

    In a release, Biden said for the second time in just two weeks, the House of Representatives has moved on critical and consequential pieces of his legislative agenda. “Now, the Build Back Better Act goes to the United States Senate, where I look forward to it passing as soon as possible so I can sign it into law,” he stated.

  • House Vote on BBB Act, Nicotine Tax Expected Today

    House Vote on BBB Act, Nicotine Tax Expected Today

    The record for the longest speech in the US House of Representatives was broke by Kevin McCarthy early Friday morning, surpassing eight hours of continuous floor time. Towards the end of the speech, McCarthy joked that “my one minute is almost up,” noting that “personally I didn’t think I could do that long.” He then spent some time asking those around him to confirm that he had beaten the record.

    The speech was centered around the vote of Biden’s Build Back Better (BBB) Act, which includes a controversial tax on next-generation nicotine products.

    Americans For Tax Reform (ATR) called on House legislators to accept the science as detailed in extensive reports commissioned by the National Institutes of Health (NIH) and the U.S. Food & Drug Administration and vote against the BBB Act (H.R. 5376) due to “its disastrous impact on public health.” H.R. 5376 is expected to be voted on today.

    Credit: Dave Newman

    “It is mind-boggling that in the midst of a global pandemic, Nancy Pelosi is pushing a tax hike on people trying to save their lives, just to pay for a tax-cut for the ultra rich” said Tim Andrews, director of Consumer Issues at Americans for Tax Reform. “The science is crystal clear: This bill is a public health disaster. The tax hikes on people trying to quit smoking contained in H.R. 5376 would lead to more people millions more Americans smoking – and dying as a result. “With millions of lives on the line, it’s time for Congressional Democrats to listen to the science – and reject Nancy Pelosi’s desperate SALT pay-for cash grab which seeks to raise revenue at the expense of human lives“

    HR 5376 includes a new tax of $50.33 per 1,810 mg of nicotine contained in next generation electronic nicotine delivery systems such as e-cigarettes. These funds would be used to help pay for SALT provisions for the ultra-wealthy, which the Congressional Joint Committee on Taxation has stated would give two-thirds of people making more than a million dollars a tax cut, according to a ATR statement. Of the 2.5 million additional smokers the Act would create, it is estimated that two thirds – or over 1.6 million -would die as a result.

    “Nancy Pelosi’s Build Back Better Act places a small amount of revenue as more important than saving over 1.5 million lives. We call upon all Democrats to follow their conscience, and do the right thing by their constituents, and vote against this deeply unethical and immoral blood tax,” said Andrews. “To increase taxes on poor Americans trying to quit smoking just to pay for tax cuts for multi-millionaires is morally reprehensible … To condemn so many lives to pay for tax breaks for multi-millionaires is one of the most morally bankrupt actions ever undertaken by a government.”