Tag: United States

  • Study: U.S. Will Miss Smoking Target Without Substantial Tax Hikes

    Study: U.S. Will Miss Smoking Target Without Substantial Tax Hikes

    Photo: schankz

    The United States will miss its 5 percent smoking prevalence target by 2030, known as Healthy People 2030, without hiking taxes on cigarettes, finds an analysis published online in Tobacco Control.

    Only five states and the District of Columbia are on track to meet this goal, according to the research; the other 45 states will need to raise excise taxes of up to $1.37 a pack every year while continuing with other tobacco control measures if they are to do so, says the author.

    The Healthy People 2030 initiative aims to reduce the current prevalence of cigarette smoking among adults in the U.S. to 5 percent by 2030. The researcher wanted to find out if this goal is achievable through hikes in state cigarette excise taxes.

    She compared trends in smoking prevalence for each state between 2011 and 2019 with the desired trends for achieving 5 percent smoking prevalence.

    The current cigarette smoking prevalence varies widely, ranging from around 7 percent in Utah to nearly 23 percent in West Virginia.

    The price-adjusted trend in cigarette smoking prevalence between 2011 and 2019 also varied widely, from −1.13 percentage points in Washington, D.C., to 0.00 in Hawaii and Montana. The desired annual trends range from −0.23 in Utah to −1.97 percentage points in West Virginia.

    The gaps between price-adjusted and desired trends were used to calculate the systematic annual increases in state cigarette excise tax that would be needed to reach the 5 percent goal alongside other tobacco control measures, such as a ban on smoking indoors, mass media campaigns and smoking cessation support.

    The price-adjusted trends in smoking prevalence observed between 2011 and 2019 are on course to exceed the desired trends for achieving 5 percent smoking prevalence by 2030 in only five states, the analysis shows: Washington, Utah, Rhode Island, Massachusetts, Maryland plus the District of Columbia.

    This suggests that most states and the U.S. overall will miss the target at the current rate of smoking decline, with 45 states needing systematic annual increases in cigarette excise tax ranging from $0.02 to $1.37 a pack between 2022 and 2030, calculates the author.

    “This requirement stands in sharp contrast with only 22 states increasing cigarette excise tax rates occasionally during 2011–2021,” notes the author. “It suggests that cigarette excise tax policy has remained a severely underused measure of tobacco control despite its proven effectiveness in reducing smoking and related health disparities,” she said in a statement.

    The analysis also suggests that the desired state average price for a pack of 20 cigarettes in 2030 will range from $6.13 to $18.4.

  • ‘Vapor Tax Would Lead to More Smokers’

    ‘Vapor Tax Would Lead to More Smokers’

    Photo: New Africa
    Guy Bentley

    The nicotine tax in the U.S. Build Back Better Plan bill will negatively affect public health and hurt lower- and middle-class Americans, according to Guy Bentley, director of consumer freedom research at the Reason Foundation.

    The current version of ever-changing proposal would introduce a new tax on e-cigarettes and other smoking alternatives, which research suggests are dramatically safer options for smokers.

    A 6 milligram nicotine/30 milliliter bottle of e-liquid, for example, would be taxed at a rate of $5.01 under the proposal. A typical pack of e-liquid pods would be taxed at $4.59. The federal tax on cigarettes is $1.01 per pack. Thus, e-cigarettes would be taxed more than regular cigarettes, and dramatically more so in states that already levy their own high e-cigarette taxes.

    Writing on the Reason Foundation’s website, Bentley cites Michael Pesko of Georgia State University, who estimates the new tax on nicotine alternatives would cause 2.7 million more daily adult smokers, 530,000 more teen smokers and 29,000 more prenatal smokers. (Pesko recently shared some of his concerns in a letter to Congress).

    This is because e-cigarettes are substitutes, not complements to combustible cigarettes, and millions of American ex-smokers have used these products to get off smoking traditional cigarettes.

    Bentley says the tax is also highly regressive and would violate President Biden’s campaign promise not to raise taxes on people earning less than $400,000 a year. 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.

    “With more than 15 million adult vapers now in America, many of whom attribute their ability to quit or reduce smoking traditional cigarettes to their use of e-cigarettes, it’s baffling House Democrats would consider targeting this group with a huge tax increase that could push many of them back to smoking and worsen public health,” wrote Bentley.

  • Vapor Tax Resurfaces in Build Back Better Act

    Vapor Tax Resurfaces in Build Back Better Act

    Photo: DedMityay

    U.S. Lawmakers have reintroduced a tax on vapor products into the Biden administration’s Build Back Better Act, reports the Winston-Salem Journal. Earlier a series of controversial tobacco hikes had been removed from the legislation.

    The latest version of the bill calls of $50.33 per 1,810 milligrams of nicotine for “any nicotine product that has been extracted, concentrated or synthesized.” The previously proposed vapor tax was $100.66 per 1,810 mg.

    Vapor industry representatives were unimpressed. “American voters are already livid with paying high prices at the pump and the grocery store,” Amanda Wheeler, president of the American Vapor Manufacturers Association, was quoted as saying by the Winston-Salem Journal.

    “It’s a certainty they will be outraged with a gigantic tax on a product that millions use to quit cigarettes.”

  • Tobacco Tax Dropped from U.S. Legislation

    Tobacco Tax Dropped from U.S. Legislation

    Photo: RomanR

    Previously proposed tobacco tax increases have been removed from the U.S. Build Back Better Act, a massive piece of legislation conceived to fund Covid-19 relief, boost economic recovery and invest in new infrastructure. The most recent version of the proposed bill, H.R. 5376, makes no mention of the measures.

    The dropped proposal would have effectively doubled the federal excise tax on small cigars and cigarettes, and it would have increased the tax on chewing tobacco from a little over $0.50 to $10.70—more than 21 times its current level. It also called for a new tax on vapor products.

    The proposed tobacco tax hikes attracted fierce criticism from retailers and tobacco harm reduction advocates, among others.

    On Sept. 24., the National Association of Convenience Stores sent a letter warning lawmakers against unintended consequences, such as illegal trade and underage sales.

    “When the price of a product rises too much too fast, illicit purveyors will seize the opportunity to exploit and take advantage of current users and entice new users without discriminating based on age,” the letter read. “This undermines the responsible measures our retailers have taken and creates a problem for society as a whole.”

    Earlier, the Tax Foundation cautioned that the proposal would make cigarettes—the most harmful tool to consume nicotine—cheaper than other, less-risky tobacco products in many states.

    While every U.S. state taxes cigarettes by quantity, a majority tax other tobacco products by price. When states tax tobacco products by price, the tax on the product will “pyramid” since the federal tax is levied at the manufacturer level and the state tax is levied at the distribution level, according to the Tax Foundation.

    “In effect, the state tax base includes the federal tax and becomes a tax on a tax,” wrote Ulrik Boesen, senior policy analyst in excise taxes of the Tax Foundation.

    While the most recent version of the H.R. 5376 omits tobacco tax hikes, there is no guarantee the measure will not reappear in future renderings of the proposed legislation.

  • U.S. Sales up for the First Time in 20 Years

    U.S. Sales up for the First Time in 20 Years

    Photo: akolosov.art

    The number of cigarettes that the largest cigarette companies in the United States sold to wholesalers and retailers nationwide increased from 202.9 billion in 2019 to 203.7 billion in 2020, according to the most recent Federal Trade Commission Cigarette Report. This represents the first time annual cigarette sales have increased in 20 years.

    According to the 2020 Smokeless Tobacco Report, smokeless tobacco sales increased from 126 million pounds in 2019 to 126.9 million pounds in 2020. The revenue from those sales rose from $4.53 billion in 2019 to $4.82 billion in 2020. For the first time, the Commission is reporting sales of nicotine lozenges or nicotine pouches not containing tobacco. In 2020, the companies sold 140.7 million units of such products in the United States, for $420.5 million.

    The amount spent on cigarette advertising and promotion increased from $7.62 billion in 2019 to $7.84 billion in 2020. Price discounts paid to cigarette retailers ($6.07 billion) and wholesalers ($876 million) were the two largest expenditure categories in 2020. Combined spending on price discounts accounted for 88.5 percent of industry spending.

    Spending on advertising and promotion by the major manufacturers of smokeless tobacco products in the U.S. decreased from $576.1 million in 2019 to $567.3 million in 2020. As with cigarettes, price discounts made up the two largest spending categories, with $296.6 million paid to retailers and $83.5 million paid to wholesalers. Combined spending on price discounts totaled $380.1 million—or 67.4 percent of all spending in 2020, up from the $376 million spent in 2019.

    For the first time, the 2020 data include information on the flavors of the companies’ smokeless tobacco products. Menthol flavored smokeless tobacco products comprised more than half of all sales revenues (54.5 percent); tobacco flavored products (that is, no added flavor) comprised 43.4 percent; and fruit flavored smokeless tobacco products comprised 2.5 percent.

    The Commission has issued the Cigarette Report periodically since 1967 and the Smokeless Tobacco Report periodically since 1987. Given the concerning trends highlighted in this report, including the first increase in cigarette sales in two decades, the Commission will continue to expand its approach in reporting shifts in the tobacco industry. The FTC also will use the newly captured data regarding smokeless tobacco products to align the Commission’s enforcement efforts with the emergent realities in the tobacco industry.

  • Trade Warns Against Tax Hike’s Unintended Consequences

    Trade Warns Against Tax Hike’s Unintended Consequences

    Photo: RomanR

    A coalition of trade associations, including the National Association of Convenience Stores, has warned U.S. Congress against the unintended consequences of raising tobacco taxes, reports Politico.

    Lawmakers have been debating an ambitious plan to create jobs and lower the cost for services such as childcare, higher education and healthcare. The Build Back Better Bill is to be funded by higher taxes on the wealthiest individuals and large corporations, including tobacco companies.

    The proposal would effectively double the federal excise tax on small cigars and cigarettes, and it would increase the tax on chewing tobacco from a little over $0.50 to $10.70—more than 21 times its current level. It also establishes a new tax on vaping, or e-cigarettes.

    In a letter dated Sept. 14, the trade associations argued that if the price of tobacco products spikes, buyers would move to the tobacco black market where sellers don’t abide by standard regulations and often prey on young people.

    “When the price of a product rises too much too fast, illicit purveyors will seize the opportunity to exploit and take advantage of current users and entice new users without discriminating based on age,” the letter reads. “This undermines the responsible measures our retailers have taken and creates a problem for society as a whole.”

    Erika Sward, assistant vice president of national advocacy at the American Lung Association, countered that raising taxes is effective at reducing tobacco consumption.

    “Very predictably and very unfortunately, this letter goes right to what the industry always argues when a meaningful and effective proposal is on the table, which is that there’s going to be a black market,” Sward said. “It bears itself out over and over again, but the bottom line is [that] what happens is we have fewer people buying tobacco products, especially kids,” with higher taxes.

    The funding proposal has also been criticized for making potentially less harmful smoking alternatives, such as vapor products, more expensive than cigarettes.

  • Critics: All-Nicotine Tax Hike Would be Counterproductive

    Critics: All-Nicotine Tax Hike Would be Counterproductive

    Photo: berkut_34

    A new plan to raise the tax on all nicotine products sold in the U.S. would benefit large corporations and traditional tobacco products while unfairly hurting people in lower socioeconomic classes, writes Alex Norcia in Filter.

    The proposal, first circulated on Sept. 12, calls 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.

    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.

    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.

    “A better strategy from a public health perspective would be to raise taxes on cigarettes more and taxes on e-cigarettes less to financially incentivize smokers’ use of safer e-cigarettes,” Michael Pesko, a health economist and an associate professor of economics at Georgia State University, told Filter.

    The tax increase has been billed as a way to make America’s wealthiest individuals and most profitable corporations pay their fair share. However, as Norcia points out, smokers do not typically belong to the upper classes. According to the Centers for Disease Control and Prevention, current cigarette smoking in the United States “is higher among people with low annual household income than those with higher annual household incomes.”

    If signed into law, the nicotine-specific tax legislation is projected to raise $96 billion in the next decade or so. But some of these funds would come from making dangerous combustibles more affordable than vaping products.

    “Between the FDA’s arbitrary decisions on flavored vaping products and the imposition of a huge federal tax on all nicotine-containing products, the Biden administration could deal a death blow to tobacco harm reduction in the United States,” Greg Conley, the president of the American Vaping Association, told Filter.

  • Push to Exempt Soldiers from ‘Tobacco-21’

    Push to Exempt Soldiers from ‘Tobacco-21’

    Photo: Getmilitaryphotos

    Members of the U.S. military under 21 years old would again be allowed to buy and use tobacco products on military bases under a proposal being pushed by Senator Tom Cotton, reports The Military Times.

    In late 2019, Congress passed legislation raising the federal minimum age to purchase tobacco from 18 to 21. Last summer, military commissaries ended all sales of tobacco products to individuals under 21, although military officials at the time acknowledged they would not strictly police use of the products among underage troops.

    Cotton’s proposal would reverse those changes just for members of the military. Any store on Defense Department property that sells tobacco products would be allowed to sell to individuals as young as 18 years old, and “any such member may consume such products on the installation.”

    “Tobacco doesn’t impair one’s judgment, so if young troops want a smoke or a dip on an overnight shift or off-duty hours, why should politicians or nanny-state bureaucrats tell them no?” Cotton told Military Times.

    Military officials have strongly discouraged use of tobacco products in recent years, spending billions on smoking cessation campaigns. A 2015 federal study found the Defense Department spends more than $1.6 billion per year on tobacco-related medical care, hospitalization and lost workdays.

    Among troops, vaping is now more popular than smoking.

  • U.S. Cigarette Prices Reach Record Highs

    U.S. Cigarette Prices Reach Record Highs

    Photo: Wirestock

    The average price of a pack of cigarettes in the United States is now $7.22—up from $4.03 in 2008, reports the U.S. Sun, citing data from the Campaign for Tobacco-Free Kids.

    To reduce smoking, 48 states and the District of Columbia have passed 148 cigarette tax increases since 2002.

    As a result, the average state cigarette tax has quadrupled from $0.43 to $1.91 per 20-pack today. In Colorado, the tax increased from $1.10 to $1.94 per pack in January this year.

    The state taxes come on top of a federal tax of $1.01, which applies to all packs regardless of where smokers live or the brand they buy.

    In Colorado, the new state tax generated more than $34 million in its first five months, according to a recent data analysis by The Colorado Sun.

    According to the Campaign for Tobacco-Free Kids, tax increases are one of the most effective ways to reduce smoking and other tobacco use.

    Every 10 percent increase in cigarette prices reportedly reduces youth smoking by 7 percent and total consumption of cigarettes by around 4 percent.

    However, some health advocates believe there are more efficient ways to cut consumption. Tobacco control activist Stanton A. Glantz, for example, has previously claimed that better results can be achieved by smoke-free workplaces, strong graphic warning labels and media campaigns.

  • Large Companies Likely to Dominate U.S. Vapor

    Large Companies Likely to Dominate U.S. Vapor

    Photo: bimserd

    Large companies may soon dominate the U.S. vapor market while e-cigarettes produced by smaller companies may disappear, according to new research by ECigIntelligence.

    Analysis of FDA premarket tobacco product applications (PMTAs) shows that more applications for simpler disposables and cigalike devices were submitted than applications for open systems. According to ECigIntelligence, the simpler products usually come from large companies while the open systems usually come from smaller businesses.

    Only about 30 open system brands have filed PMTAs, implying that 85 percent of open system brands will be removed from the market, even if all 30 filed PMTAs are approved.

    “This may indicate the discouragement nontobacco companies face when applying for PMTA approval,” said ECigIntelligence Managing Director Tim Phillips. “The PMTA process can be a grueling one for nontobacco companies without sufficient financial means or know-how. And if smaller brands are to become less prevalent in this category, consumers may soon only have the option of a few models provided by a handful of big companies.”