Tag: Taxation

  • Gay: Taxing Decisions

    Gay: Taxing Decisions

    Credit: Orlando Bellini

    Higher taxes and graphic warnings are not the best ways to encourage smokers to switch to ENDS.

    By George Gay

    Towards the end of August, the U.S. Food and Drug Administration announced that it had issued marketing denial orders (MDOs) in respect of about 55,000 flavored electronic nicotine-delivery system (ENDS) products. At about the same time, the FDA announced also that the deadline for combustible-cigarette manufacturers to print new health warnings on their products and product advertising had been delayed until October 11, 2022.

    I think these two developments will strike you as odd if you subscribe to two almost universally-held ideas: that the consumption of combustible cigarettes kills and that graphic health warnings help to discourage people from such consumption; and if you subscribe to the idea that is less widely held: that ENDS are the most effective products for helping people quit smoking.

    Indeed, to say that these two developments seem odd is something of an understatement. They represent a world turned upside down; a world in which the consumption of combustible cigarettes, which are regarded as deadly, is not discouraged, while the consumption of less-risky, cigarette-substitute products is discouraged.

    Credit: Timothy S. Donahue

    It is important to say, however, that what has happened is not entirely down to the FDA, which, in line with its obligations under the Tobacco Control Act of 2009, initially tried to bring in graphic health warnings on combustible cigarettes about 10 years ago, only to have them challenged in the courts and declared unconstitutional. The latest attempt at bringing in such warnings, the details of which became known in 2020, was similarly subjected to challenges, and to court-imposed delays.

    However, it is reasonable, I think, to quarrel with the types of warnings proposed, which seem in large part to follow the same tired pattern of those used in other countries and regions. For instance, the proposed U.S. graphic warning pictures and captions, in line with those introduced elsewhere, do not tell the full story – that is, they don’t tell the whole truth.

    Just to take one example; the caption on one picture reads, Warning: Smoking causes cataracts, which can lead to blindness. I don’t smoke, but I have cataracts forming; so obviously there are other causes of cataracts, the biggest of which I would say is probably, as in my case, getting old.

    If there is to be an honest attempt at informing smokers, the cataracts warning needs to answer a lot of questions specifically aimed at people living in the U.S., questions that could be answered easily on a pack insert. Are there other causes of cataracts and what are they? At what age do smokers and non-smokers generally start to suffer from cataracts? Are cataracts more common in smokers than in non-smokers? Given that removing cataracts is one of the more common and more successful operations performed, how often do cataracts lead to blindness? Is the incidence of cataract-induced blindness more common among smokers than in the general population?

    That the caption doesn’t answer these questions and the others that might rightly be raised by smokers, in my view is down to the paternalistic attitude of the FDA – and agencies in other countries that are in charge of determining the form of such warnings. Largely, I think, because smokers tend to be found in what are termed lower socio-economic groups, it is assumed they have to be told what is good for them without bothering their heads with details; whereas, in fact, some of them are rather smart.

    Meanwhile, the FDA, while not being directly responsible for the delay in requiring health warnings on cigarette packs and advertising, is, in my view, more culpable in respect of the muddle over ENDS products. Basically, it has become hoist on its own petard – entrapped by its own propaganda about youth vaping.

    In issuing its MDOs in August, the FDA said it had determined that the “applications for about 55,000 flavored ENDS products from three applicants lacked sufficient evidence that they have a benefit to adult smokers sufficient to overcome the public health threat posed by the well-documented, alarming levels of youth use of such products. The products from JD Nova Group LLC, Great American Vapes, and Vapor Salon subject to this action are non-tobacco-flavored ENDS and they include flavors such as Apple Crumble, Dr. Cola and Cinnamon Toast Cereal.”

    This whole idea of considering public health, or population-wide health, rather than individual health, has its merits, but it is also flawed; as is the idea of utilitarianism on which it seems to be loosely based. If the idea is to bring about the maximum good for the maximum number of people, the calculations necessary become overwhelming and, in part, require the foretelling of the future.

    As the FDA says, the applicant must demonstrate that the product is appropriate for the protection of public health. “This public or population health standard is quite high and requires considering the product’s risks and benefits to the population as a whole, including users and nonusers of the tobacco product, and taking into account the increased or decreased likelihood that existing users of tobacco products will stop using such products, and the increased or decreased likelihood that those who do not use tobacco products will start using such products,” it says.

    If a doctor you have consulted wants to prescribe for you an inhaler, is it incumbent upon her to take into account the fact that the production of that inhaler, and all the inhalers you will need for the rest of your life, will produce CO2 emissions that will exacerbate the existential climate crisis we have created and, therefore, the health of Joe Blow, who will then need an inhaler so that there are now two such devices being produced on a regular basis along with more CO2…?

    To my way of thinking, it makes sense to consider population-wide health effects where there is a population-wide health threat, such as that caused by pollution, which is a far bigger killer than is tobacco smoking but which is largely consigned by those who should be tackling it to the too-hard drawer. But it seems to make little sense where what is in question comprises health threats to individuals and possible solutions for those threats.

    Of course, what those who like to consider population-wide health benefits or threats will tell you is that there is no point in allowing the sale of vaping devices so that middle-aged Joe Blow can use such devices to quit smoking if young man John Doe takes up vaping and goes on to become a smoker, at least when this example is extrapolated across the population. I really don’t accept this argument because, to me, Joe and John are individuals, as are all the other people who make up the population and who make their own choices about what they do with their lives.

    What has happened here is that, as mentioned above, the FDA has found itself hemmed in by its own propaganda. Take another look at that part of the FDA’s statement above where it tries to justify dumping 55,000 vaping products and where it talks of: ‘the public health threat posed by the well-documented, alarming levels of youth use of such products’.

    To me, the use of the word “alarming” is an example of where the FDA’s claim to scientific rigor runs out of road. Compare what the FDA had to say with what was stated recently in a report entitled, Balancing Consideration of the Risks and Benefits of E-Cigarettes, which, I understand, was penned by 15 past presidents of the Society for Research on Nicotine and Tobacco.

    Although the authors argue that the overwhelming focus of US policies and media attention on decreasing youth vaping has distracted from the goal of reducing smoking, they concede that: “Still, concerns emanating from substantial increases in youth vaping in 2018 and 2019 are readily understandable and important to address.”

    It is also important to take note of something else that I think is significant. A contributor to the Global Forum on Nicotine held in the UK earlier this year explained how U.S. government policies were driven by the fears and wishes of the majority population, made up of the suburban, white, middle-classes. This was why tobacco smoking, a habit mainly of the financially less-well-off, had been largely tolerated [health warnings delayed again], while vaping, the subject of scare stories about an epidemic among the children of the middle class, had launched a moral panic [55,000 products dumped].

    The Balancing Consideration report is indeed a model of balance; as can be glimpsed from this passage: ‘Smokers unable to quit smoking with evidence-based cessation methods should be well informed about the relative risks of vaping and smoking and vaping’s potential to help them quit smoking. They should understand that, while the long-term health consequences are unknown, completely substituting vaping for smoking likely reduces health risks, possibly substantially.

    Dual use of cigarettes and e-cigarettes will not have a comparable beneficial effect. However, a period of dual use may be necessary for some smokers to transition from smoking. Because vaping itself poses some risk, the best advice is to eventually stop vaping as well.’

    I find it impossible to argue with almost anything in this passage or in the objective of the authors, which is to encourage more balanced consideration of vaping within public health and in the media and policy circles. There is certainly a need for such balance. As the authors say in the introduction to the report: “Opponents focus on e-cigarettes’ risks for young people, while supporters emphasize the potential for e-cigarettes to assist smokers in quitting smoking.

    Most U.S. health organizations, media coverage, and policymakers have focused primarily on risks to youths. Because of their messaging, much of the public – including most smokers – now consider e-cigarette use as dangerous as or more dangerous than smoking.”

    The authors are correct; this is a situation that needs to be rectified.

    And yet, I cannot go along with everything in the report, though it talks with empathy about smokers. “Today’s smokers come disproportionately from lower education and income groups, the LGBTQ (lesbian, gay, bisexual, transgender, and queer or questioning) community, and populations suffering from mental health conditions and from other drug addictions,’ it says. ‘Smoking accounts for a significant proportion of the large life expectancy difference between affluent and poorer Americans.”

    And the report is right in making the point that a lot of people hardly realise that smokers still exist. “To the more privileged members of society, today’s smokers may be nearly invisible,” it says. “Indeed, many affluent, educated US persons may believe the problem of smoking has been largely ‘solved.” They do not smoke. Their friends and colleagues do not smoke. There is no smoking in their workplaces, nor in the restaurants and bars they frequent. Yet one of every seven U.S. adults remains a smoker today.”

    But then, to my mind, the report loses its way. “Tax cigarettes and other combustible tobacco products heavily; impose a more modest tax on e-cigarettes,” it advises. “Taxes should be proportionate to risk. A much higher tax on combustibles will encourage adult smokers to quit smoking or to switch to less expensive e-cigarettes. By raising the price of e-cigarettes, a modest tax will discourage their use by price-sensitive youths.”

    There are several problems with this, I would suggest, partly perhaps because, I suspect, the authors don’t smoke and don’t generally rub shoulders with those in the lower socio-economic groups. The authors want to tax smokers heavily having already declared that these people generally come from groups less well-off financially. They say that this is to encourage smokers to stop smoking, but it is nothing of the sort. It is an attempt at bludgeoning them into giving up.

    To my way of thinking, if a smoker is given the facts about her habit, partly through the medium of comprehensive, fact-based health warnings, and she chooses to keep smoking, that is her business. Hitting her with levels of taxes that would not be tolerated but for the fact that smokers comprise an unrepresented minority is grossly unfair.

    And what will happen to the money raised? Will it be spent on helping these people? The record shows that this will not be the case. The money will be spent on politicians’ vanity projects, while nine million children will still go hungry.

    And finally, what about the seemingly worthwhile aim of increasing the life expectancy of these smokers by bludgeoning them into quitting? Given that the last years of these people’s lives are hardly likely to be halcyon; it might be a good idea to ask them if they really want another 10 years of struggling to make ends meet as they become increasingly infirm. Walk – or perhaps hobble – a mile in my shoes.

  • Capitol Crisis

    Capitol Crisis

    Credit: Bbourdages

    A proposed tax bill in U.S. Congress would add $40 to the cost of a 120 mL bottle of e-liquid with 6 mg of nicotine.

    By VV staff

    The proposed U.S. Tobacco Tax Equity (TTE) Act would tax vaping products the same as combustible cigarettes. According to research from the Tax Foundation, an independent tax policy nonprofit, the proposal would double the rates on combustible cigarettes and increase the rates on all other tobacco and nicotine products—including electronic nicotine-delivery systems (ENDS)—to achieve parity with the traditional tobacco tax rate.

    The proposed rule aims for the tax per 1,000 cigarettes to be increased to $100.66. Vaping products would be taxed at this same rate, with 1,000 cigarettes being equal to 1,810 mg of nicotine.

    “In addition to the one-time increase, the rates would be indexed to inflation, which means they would automatically increase every year,” the report states. “According to Tax Foundation estimates, the tax increases would raise $112 billion over 10 years. The bulk of the revenue, $74.8 billion, is from the doubling of cigarette taxes. The tax on vapor products would raise roughly $15 billion over 10 years.”

    According to Alex Norcia of Filter, the proposal would benefit large corporations and traditional tobacco products while unfairly hurting people in lower socioeconomic classes as most smokers do not typically belong to the upper classes. Current cigarette smoking in the United States “is higher among people with low annual household income than those with higher annual household incomes,” according to the U.S. Centers for Disease Control and Prevention.

    “This means that a 30 mL bottle of e-liquid containing 3 mg of nicotine per milliliter would be subject a tax rate of $5 for the bottle. A 120 mL bottle of e-liquid that contains 6 mg of nicotine per milliliter would attract a tax rate of $40 for the bottle,” writes Norcia. “In comparison, critics and tax reformists have estimated that a four-pack of Juul pods would be taxed around $9—giving a clear advantage to a giant over the smaller player. More alarmingly, a pack of cigarettes would only be taxed around $2, creating an incentive for nicotine users to pick cigarettes over less risky vapor products.”

    In an interview with C-Span on Sept. 15, White House Press Secretary Jen Psaki was asked if the White House believes that the proposed bill on taxing tobacco/vaping products would violate President Biden’s promise to not raise taxes on those making under $400,000 per year. She replied, “No, we don’t,” adding that it was “just one of the ideas out there.”

    Vape shops are saying that the proposed tax increase would “completely destroy” their businesses, saying it would be even worse than the U.S. Food and Drug Administration’s failure to approve any ENDS products by the Sept. 9 deadline (see “Authorization Denied,” page?) and the issuing of hundreds of marketing denial orders (MDOs).

    “This is going to more than double, and in some cases triple or quadruple, the price of liquids that I sell,” Keith Gossett, the owner of Bucky’s Vape Shop in Columbus, Georgia, told Reason. “I’m going to sit there and try to tell a man with a $6 pack of cigarettes that my [$75] product is better. This tax will close my shop.”

    Rather than protecting public health, high excise taxes on lower risk tobacco products jeopardize public health by pushing consumers back to smoking combustible products, according to the Tax Foundation report. “If the policy goal of high taxes on cigarettes is to encourage cessation, taxation of other tobacco and nicotine products must be considered a part of that policy design,” the report states.

    The last time the federal excise tax on tobacco was increased was in 2009. While the federal tax has not changed for 12 years, the average tax paid by consumers has increased drastically. Including the last federal increase, the average combined state and federal excise tax rate on tobacco products has jumped more than 80 percent (the average state excise tax rate increased 65 percent between 2009 and 2021), according to the Tax Foundation.

  • EU Taxation Consultation Split Over Vapor Issues

    EU Taxation Consultation Split Over Vapor Issues

    Image: mazhor

    Participants in the public consultation organized by the European Commission on the review of the Tobacco Taxation Directive are split on many questions relating to e-cigarettes and e-liquids, according to the Independent European Vape Alliance (IEVA).

    Following the publication of the raw data by the European Commission, the IEVA conducted a preliminary analysis of the first results.

    According to the group, the participation rate to this public consultation was higher than usual. The survey gathered 7,262 answers, 89.2 percent originating from EU citizens, 6 percent from companies and business organization and 1.1 percent from business associations.

    Most active respondents were based in France (26.9 percent), Greece (23.2 percent), Germany (7.9 percent), Poland (6.5 percent), Italy (5.8 percent), Romania (5 percent) and Spain (4.3 percent).

    Regarding specific questions on e-cigarettes and e-liquids, the results provide some light trends but the answers remain overall even split:

    Harmonization of tax rules for e-liquids containing nicotine:

    45.6 percent against, 44.8 percent in favor, almost 10 percent undecided  

    Harmonization of tax rules for e-liquids that do not contain nicotine:

    50.8 percent against, 40 percent in favor, almost 10 percent undecided

    Establishment of a minimum tax on e-cigarettes:

    46.7 percent answered “none,” 41.6 percent answered “€0.10/ml,” 5.6 percent answered “€0.30/ml,” 6.1 percent said either “don’t know” or provided no answer.

    According to the IEVA, The main question to be answered now is how the Commission will interpret the 10 percent indecisive parties for the first and the second question, as those 10 percent could tilt the balance in a way or another.

    Following the closure of the public consultation, the European Commission may now complete drafting of the proposal to revise the tobacco taxation directive. The IEVA expects the document to be presented in the fourth quarter of 2021 or the first quarter of 2022.

  • Tobacco Bill Would Tax Vapor Same as Combustibles

    Tobacco Bill Would Tax Vapor Same as Combustibles

    The proposed U.S. Tobacco Tax Equity (TTE) Act would tax vaping products the same as combustible cigarettes. According to research from the Tax Foundation, an independent tax policy nonprofit, the proposal would double the rates on combustible cigarettes and increase the rates on all other tobacco and nicotine products – including electronic nicotine-delivery systems (ENDS) – to achieve parity with the traditional tobacco tax rate.

    Credit: TS Donahue

    The proposed rule aims for the tax per 1,000 cigarettes to be increased to $100.66. Vaping products would be taxed at this same rate, with 1,000 cigarettes being equal to 1,810 milligrams of nicotine.

    “In addition to the one-time increase, the rates would be indexed to inflation, which means they would automatically increase every year,” the report states. “According to Tax Foundation estimates, the tax increases would raise $112 billion over 10 years. The bulk of the revenue, $74.8 billion, is from the doubling of cigarette taxes. The tax on vapor products would raise roughly $15 billion over 10 years.”

    According to Alex Norcia of Filter, the proposal would benefit large corporations and traditional tobacco products, while unfairly hurting people in lower socioeconomic classes as most smokers do not typically belong to the upper classes. Current cigarette smoking in the United States “is higher among people with low annual household income than those with higher annual household incomes,” according to the Centers for Disease Control and Prevention.

    “This means that a 30-milliliter bottle of e-liquid containing 3 milligrams of nicotine per milliliter would be subject a tax rate of $5 for the bottle. A 120-milliliter bottle of e-liquid that contains 6 milligrams of nicotine per milliliter would attract a tax rate of $40 for the bottle,” writes Norcia. “In comparison, critics and tax reformists have estimated that a four-pack of Juul pods would be taxed around $9—giving a clear advantage to a giant over the smaller player. More alarmingly, a pack of cigarettes would only be taxed around $2, creating an incentive for nicotine users to pick cigarettes over less-risky vapor products.”

    Credit: Tax Foundation

    The TTE Act as part a massive $3.5 trillion spending bill appear to be heading for a collision with President Joe Biden’s pledge not to raise taxes on America’s middle class. In an interview with C-Span on Sept. 15, White House Press Secretary Jen Psaki was asked if the White House believes that the proposed bill on taxing tobacco/vaping products would violate Biden’s promise to not raise taxes on those making under $400,000 per year. She replied, “No, we don’t,” adding that it was “just one of the ideas out there.”

    Vape Shop owners are saying that the proposed tax increase would “completely destroy” their businesses, saying it would be even worse than the U.S. Food and Drug Administration’s failure to approve any ENDS products by the Sept. 9 deadline and the issuing of nearly 200 marketing denial orders (MDOs).

    “This is going to more than double, and in some cases triple or quadruple, the price of liquids that I sell,” says Keith Gossett, the owner of Bucky’s Vape Shop in Columbus, Georgia, told Reason. “I’m going to sit there and try to tell a man with a $6 pack of cigarettes that my [$75] product is better. This tax will close my shop.”

    The last time the federal excise tax on tobacco was increased was in 2009. While the federal tax has not changed for 12 years, the average tax paid by consumers has increased drastically. Including the last federal increase, the average combined state and federal excise tax rate on tobacco products has jumped more than 80 percent (the average state excise tax rate increased 65 percent between 2009 and 2021), according to Tax Foundation.

  • Taxing the Solution

    Taxing the Solution

    Credit: Farizun Amrod

    Vaping products don’t create costs; they make some of the costs of tobacco use disappear.

    By George Gay

    According to a Vapor Voice news story quoting a CStoreDecisions piece by Isabelle Gustafson, lawmakers have introduced into the U.S. Senate a bill that would establish a federal tax on vaping products and increase the traditional tobacco tax rate for the first time in a decade.

    I quote below three of the five-paragraph news story in full because I believe that some of the points made by those supporting the bill need to be challenged, though I acknowledge that such challenge will not affect the final outcome:

    The Tobacco Tax Equity Act of 2021 aims to “close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation to ensure it remains an effective public health tool and setting the federal tax rate for all other tobacco products at this same level.”

    “Tobacco-related disease accounts for one out of every five deaths in America, and I know that story firsthand,” Senate Majority Whip Dick Durbin was quoted as saying. “Data shows that the most effective strategy to prevent children from starting this deadly habit is to price it out of their range. This bill would help reduce tobacco and e-cigarette use by ending loopholes that the industry has exploited to target our children. If America can kick its nicotine addiction, it would go a long way to improving our public health for generations to come.”

    “Loopholes in our tax code continue to favor big tobacco while the American public, especially our youth, pays the price,” said Representative Raja Krishnamoorthi. “The Tobacco Tax Equity Act increases taxes on cigarettes and finally imposes taxes on the e-cigarettes hooking our children on nicotine, which would generate billions of dollars in federal revenue. As a father of a high schooler and middle schooler, I’m determined to make sure we end the youth nicotine and vaping epidemic.”

    I would like firstly to question the term “loopholes,” which is used three times, once in the introduction and once each by the two politicians quoted. The word loophole is used normally to convey the idea that some scam is in operation that allows a disreputable individual, corporation or organization to gain an advantage over others by obeying the letter of a law or rule but not the spirit of that law or rule. And that implied criticism is aimed at one of the usual suspects—big tobacco.

    But is this what has been going on here? Has big tobacco been using loopholes in the tax system to target young people? Not from the evidence presented. The politicians quoted seem to be complaining that big tobacco hasn’t been falling in line with tax rules not yet in place, which seems a tad unfair. In other words, the complaints, if any, should be aimed at the politicians for not having brought in these new rules earlier, given that they seem to believe they are so important.

    But it is not the way of politicians to blame themselves or even to admit that they have been neglectful of their duties, so the politicians try to clamber onto the word loopholes as if it somehow represents the moral high ground.

    And on that somewhat unstable ground, they teeter. Durbin is quoted as implying that one or more people from within his circle of family and/or friends died from a tobacco-related disease. I’m sure that most people would sympathize with Durbin at this point, but the problem here is that he is trying to convince people of the correctness of his position by arguing from the particular to the general.

    And the concern must be that despite the fragility of such arguments, other politicians will be won over. It makes you wonder what would happen if a politician called for extra taxes on automobiles because somebody from within her circle had been killed in an automobile wreck.

    What I don’t like, also, about Durbin’s position is that it smacks of collective punishment. Tobacco consumption led to the death of somebody from within his circle, so all tobacco users should be punished through the taxation system, even though what they are doing is legal and even though they had no interaction or involvement with the dead person. Such actions are banned even in war.

    Then, from the dizzying moral heights of language loopholes and particularities, the announcement moves on to the favorite ploy of all: emotional blackmail. We are told that the new taxes will protect “our children”—or, rather, children (three mentions), youth (two mentions) and schoolers (two mentions).

    I wonder how? Perhaps, in the light of not enough attention being paid by politicians to some of the other needs of children, the additional money raised through the new taxes could be used to feed the 18 million children who are projected to face hunger in the U.S. this year. But don’t hold your breath.

    Credit: Auremar

    Krishnamoorthi is quoted as saying that the Tobacco Tax Equity Act “increases taxes on cigarettes and finally imposes taxes on the e-cigarettes hooking our children on nicotine.” Note the use of “finally” here, which I guess is meant to imply that it has taken a long time to bring the bill forward because of the heroic efforts that politicians have had to put in to overcome the huge barriers standing in the way of tax reform, when, presumably, the reason is that they have not been bothered up to this point.

    I would also like to take issue with the idea that Krishnamoorthi trots out about “e-cigarettes hooking our children on nicotine.” Does he know this to be the case, I wonder? Has he proof? It is true that if you look on the website of the National Institute of Drug Abuse, you will see a piece that says, “Consuming nicotine—through regular cigarettes or vaping—leads to the release of the chemical dopamine in the human brain. As with many drugs, dopamine prompts or ‘teaches’ the brain to repeat the same behavior (such as using tobacco) over and over.”

    But according to a review by Rivka Galchen (London Review of Books, April 22) of The idea of the Brain, the author, Matthew Cobb, casts doubt on such an idea. “The connection of dopamine to addictive behavior—Cobb cites a Facebook founder saying the site was meant to be addictive, to ‘give you a little dopamine hit’—is ‘nonsense’ and ‘neurobollocks,’” Galchen quotes Cobb as saying. I am not saying that Cobb is correct. I am not in a position to be able to judge such things, but what he has to say must surely give people, even politicians, pause for thought, for he is not alone in thinking this way.

    One problem in assessing the rights and wrongs of taxing vaping products in the U.S. arises from the fact that politicians have fallen for the Food and Drug Administration’s descent from science to alchemy in “deeming” these products to be tobacco products. Imagine a U.S. in which bread has not been invented and a significant proportion of the population lives on cake as a staple, with the consequence that these people are wobbly fat.

    In trying to improve the situation, the authorities have turned to imposing high taxes on cake, but the sugar content proves to be too appealing, and the people keep buying cake, whether tax-paid or illicit. The authorities then declare war on the cake manufacturers who, after a while, admit that too many wobblies are dying, and come up with bread, with which they claim they can wean at least some of the people off cake.

    What do the authorities do? Do they welcome this development? Not if we are talking about the FDA. They say that bread, like cake, contains flour, and, since there are still small amounts of sugar in bread to make it palatable, bread must be deemed to be cake. At which point, the politicians, desperate for funds, realize that bread can be taxed. Alice has gone headfirst through the looking glass.

    Credit: Highway Starz

    A couple of other points come out of the announcement of the bill. It is clear that part of the aim of the bill is to force the U.S. “to kick its nicotine habit.” But nicotine and tobacco use are both legal in the U.S., so people have the right to consume tobacco and nicotine products. There is a danger here that politicians are going to muddle up issues of ethics with those of rights.

    Just because you object to something on ethical grounds doesn’t bestow on you the right to make it unobtainable for those who don’t go along with your ethical views. In the U.K., we seem to get stuck in the same morass when discussing the issue of assisted dying, and all too few politicians are willing to make the stand that though they might be ethically opposed to assisted dying, they recognize the rights of others to avail themselves of it. As I believe Michel de Montaigne pointed out in the 16th century, “Life is slavery if freedom to die is wanting.”

    At the same time, it seems to me that we enter the tobacco and nicotine tax debate too far along the line. We enter it on the assumption that tobacco and nicotine products should be taxed. But why is this so? Well, one idea has it that products should be taxed according to the harm that they cause. This point was made by a couple of speakers who addressed the Western Economic Association International (WEAI) virtual conference during March.

    According to a news report, one of them, Woo-Hyung Hong, professor in the Hansung University Department of Economics (South Korea), said that tobacco taxes should be based on a product’s external economic costs. Such a system should consider medical costs, loss-of-labor capital costs, costs from cigarette-related fires and avoidance costs, among others.

    There is a certain logic associated with this idea, but if you accept that logic, then surely you have to apply it to everything. Automobiles, for instance. Look at the medical costs that arise from people driving automobiles. There are, of course, the deaths and injuries caused by car wrecks, the deaths and injuries caused by the pollution most automobiles contribute to, pollution that has now been acknowledged to be a bigger killer worldwide than tobacco consumption. And then there is the issue of people becoming wobbly fat because they use their cars rather than walk.

    This, in part, is what the U.S. Centers for Disease Control and Prevention has to say on this subject: “Obesity is serious because it is associated with poorer mental health outcomes and reduced quality of life. Obesity is also associated with the leading causes of death in the United States and worldwide, including diabetes, heart disease, stroke and some types of cancer.”

    And what about the loss-of-labor costs? Well, for a start, all of the medical problems outlined above are likely to lead to such loss of labor, and just imagine the loss caused by people snarled up in highly polluting traffic jams.

    And while most automobiles still run on fossil fuels, there is the billion-dollar cost of subsidizing the oil companies for pumping these fuels out of the ground—fuels, the use of which is causing eye-watering costs associated with climate change and environmental breakdown, costs from which we might never recover.

    None of this is to say that tobacco should not be taxed. We are too far down the road to go back now. But all of the revenue from such taxes should be used to relieve some of the causes that encourage people to take up smoking; one of which is clearly poverty since poverty is a good predictor of the likelihood of a person being a smoker. I believe in the idea of redistributive taxes, but the way that tobacco taxation works at the moment is that it is redistributive “upward,” which is obscene.

    And finally, there is no reason to tax vaping devices. They don’t create costs; they make some of the costs of tobacco use disappear. They are a solution, not a problem.

  • Israeli Lawmaker Wants Vapor Taxed Same as Cigarettes

    Israeli Lawmaker Wants Vapor Taxed Same as Cigarettes

    A lawmaker in Israel wants to tax vaping products the same as traditional tobacco cigarettes. Health Minister Nitzan Horowitz is set to propose legislation to combat smoking addiction in Israel, including disposable electronic cigarettes that he says have become popular among Israeli teenagers.

    According to the Isreal Hayom, quoting anonymous sources sources states: “There is concern that in the past the decision-making of the political echelon with regards to e-cigarettes was motivated by unprofessional considerations,” the source states. “Horowitz intends to investigate the matter of disposable electronic cigarettes and government policies and restrictions on smoking products … with the consideration of public health alone.”

    Credit: Christoph

    As part of his initiative, the health minister is looking to raise the tax on vapors to equal regular cigarettes and tobacco; withdraw the special permit that had been granted to newspapers and other written advertising to print cigarette ads; and adopt graphic warnings on cigarette packages – a measure not yet applied in Israel but used in 120 countries worldwide, according to the story.

    “The idea to make electronic cigarettes disposable is a sophisticated and dangerous marketing manipulation,” CEO of nonprofit Smoke Free Israel Shira Kislev said. “Because teenagers then think they are not risking getting addicted to cigarettes because their vapor will only last them one time. But the nicotine content makes these e-cigarettes addictive, and in a cruel way, repeated use makes teenagers smoke them more and more.”

  • Germany Passes Bill to Raise Vapor, HnB Taxes

    Germany Passes Bill to Raise Vapor, HnB Taxes

    Vapers and cigarette smokers alike will be paying more for those products after the German Bundestag signed off on a bill to raise taxes on combustible cigarettes, e-cigarettes and heat-not-burn (HnB) tobacco products.

    Credit: Craig

    On Friday morning, the Bundestag waved through legislation to make vaping in Germany more expensive as of next year. Legislators are coming down hard on e-cigarettes HnB products which were previously only lightly taxed. That will change in the future, as the government moves to tax even nicotine-free varieties of e-cigarettes.

    Currently, a 10-millilitre bottle of vape liquid costs around 5 euros in Germany. In 2022, an extra 1.60 euros will be added to this price in taxation, and this will rise to 3.20 euros by 2026. An additional tax is also to be introduced for HnB products so that those products will be treated similarly to cigarettes for tax purposes.

    The new law has been met with dismay by the manufacturers of vaping products who argue that their products contain significantly fewer harmful substances than tobacco cigarettes and should therefore not be subject to the same levels of taxation. The Association of the E-Cigarette Trade (VdeH) warned that the move might prompt vapers to revert to smoking tobacco cigarettes.

    The so-called “Alliance for Tobacco-Free Enjoyment” – a representative body for the e-cigarette industry – said that it intends to go to the Federal Constitutional Court to file a complaint against what it sees as a disproportionate tax increase.

    Also, the combustible tobacco tax on a packet of 20 cigarettes will rise by an average of 10 cents in 2021. A year later, a further 10 cents will be added, and in both 2025 and 2026 another 15 cents per pack will be added.

    Around one in four adults in Germany smokes regularly, meaning that the tobacco tax is a big source of revenue for the government. Last year, it swelled the government’s coffers to the tune of approximately 14.7 billion euros. The last time the tobacco tax was increased was in 2015.

  • Indiana Governor Signs Budget Bill With New Vapor Taxes

    Indiana Governor Signs Budget Bill With New Vapor Taxes

    Indiana’s $44 billion budget for fiscal years 2022 and 2023, signed by the governor, contains new taxes on electronic cigarettes. Gov. Eric Holcomb signed H.B. 1001 Thursday. The bill adopts new taxes on open and closed cartridges of e-cigarettes. The tax is 25 percent wholesale on closed systems like vaping pods and 15 percent retail on open systems like refillables.

    Credit: DedMitay

    The Senate had originally planned on a flat 10 percent tax at retailers, but that was highly criticized as being too low, according to WTHR.com .

    “We are very pleased that the state legislature has recognized the importance of implementing a meaningful tax on vaping and e-liquids. We pushed back on the original Senate amount because it was not nearly enough to have an effect on discouraging Hoosier youth from taking up vaping, which too frequently leads to cigarette smoking for this group,” said Kevin Brinegar, president and CEO Indiana Chamber of Commerce. “Ultimately, Senate leadership recognized this as well and, working with House leaders, has put forth a strong tax system on vaping and e-liquids. Now, all of those products will be taxed on par with traditional tobacco ones, as they should be.”

    The Senate rejected a 50-cents-per-pack increase in the state’s cigarette tax. The state’s 99.5-cents-per-pack rate was last raised in 2007. A group of health industry and other business representatives had been pushing for a $2-per-pack increase to tamper down on the state’s 21.1 percent smoking rate for adults.

    “While the Indiana Chamber is still disappointed that there was very little interest in raising the cigarette tax this session, imposing the state’s first vaping and e-cigarette tax is a big step and will positively impact the health of many young Hoosiers in particular,” Brinegar said.

  • Federal E-Cigarette Tax Bill Introduced in U.S. Senate

    Federal E-Cigarette Tax Bill Introduced in U.S. Senate

    A new bill that would establish a federal tax on vaping products has been introduced in the U.S. Senate. Senate Majority Whip Dick Durbin, Senate Finance Committee Chair Ron Wyden (D-OR), Representative Raja Krishnamoorthi (IL-D-08) and seven other Senate Democrats have introduced the bicameral Tobacco Tax Equity Act of 2021, which would also increase the traditional tobacco tax rate for the first time in a decade.

    Credit: Steve Buissine

    “Tobacco-related disease accounts for one out of every five deaths in America, and I know that story firsthand,” said Durbin, according to CStoreDecisions. “Data shows that the most effective strategy to prevent children from starting this deadly habit is to price it out of their range. This bill would help reduce tobacco and e-cigarette use by ending loopholes that the industry has exploited to target our children. If America can kick its nicotine addiction it would go a long way to improving our public health for generations to come.”

    Joining Durbin and Wyden in introducing the bill in the Senate includes U.S. Senators Patty Murray (D-WA), Sherrod Brown (D-OH), Jack Reed (D-RI), Jeff Merkley (D-OR), Richard Blumenthal (D-CT), Ed Markey (D-MA), and Mazie Hirono (D-HI).

    The Tobacco Tax Equity Act of 2021 aims to “close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation to ensure it remains an effective public health tool, and setting the federal tax rate for all other tobacco products at this same level.”

    “Loopholes in our tax code continue to favor big tobacco while the American public, especially our youth, pays the price,” said Krishnamoorthi. “The Tobacco Tax Equity Act increases taxes on cigarettes and finally imposes taxes on the e-cigarettes hooking our children on nicotine, which would generate billions of dollars in federal revenue. As a father of a high schooler and middle schooler, I’m determined to make sure we end the youth nicotine and vaping epidemic.”

    The Tobacco Tax Equity Act of 2021 is endorsed by the Campaign for Tobacco-Free Kids, American Academy of Pediatrics American Lung Association, American Heart Association, American Cancer Society Cancer Action Network, American Public Health Association, National Association of County and City Health Officials, Trust for America’s Health and American Thoracic Society.

  • 25% Wholesale Vapor Tax Clears Indiana Senate Hurdle

    25% Wholesale Vapor Tax Clears Indiana Senate Hurdle

    A bill in Indiana that will bring new taxes on vaping as well as a broad framework for disbursing future opioid litigation settlement cash is expected to be signed into law by Governor Eric Holcomb, today. It’s Indiana’s first-ever tax on e-cigarettes.

    Credit: Adobe Stock / Luzitanija

     

    The tax, which will take effect July 1, 2022, is split between wholesale and retail, with closed-system products like prefilled pods assessed 25 percent of the wholesale cost, and open-system products like bottled e-liquid being taxed at 15 percent of the retail price (a sales tax).

    A previous version proposed a 10 cent-per-milliliter tax on vaping fluid and an additional 10 percent percent excise tax on e-cigarettes and vaping products.

    Health advocates say the plan meets their goal of a tax rate comparable to the rate on traditional
    cigarettes, according to wibc.com. Indiana State Medical Association president Roberto Darroca says doctors are
    particularly concerned about discouraging teenagers from taking up vaping so they don’t get a
    taste for nicotine and move on to traditional cigarettes.