NEJM perspective argues for higher tax rates for cigarettes than for vapor products

[Bill Godshall]

NEJM commentary by Frank Chaloupka, Dave Sweanor and Ken Warner explain why tax rates for cigarettes should be significantly higher than for smokeless tobacco products and vapor products (since the latter products are far less hazardous than cigarettes, and because differential tax rates encourage cigarette smokers to switch to noncombustibles).
Differential Taxes for Differential Risks—Toward Reduced Harm from Nicotine-Yielding Products | Tobacconomics
MMS: Error

To read the full text, you need to click on the top weblink, and then click on the weblink for the full piece in the NEJM.

This article should be sent to any legislative body that is considering imposing huge taxes on e-cigs, although I suspect Reynolds will use it to support their e-cig tax bills (that tax e-liquid by the ml so e-liquid is taxed at a much higher rate than cigalike e-cigs).

While I don't support some things advocated in this article, the Big Pharma funded folks at CTFK, ACS, AHA, ALA (who have been lobbying state legislatures and Congress to tax e-cigs, smokeless tobacco and other OTP at the same rate as cigarettes) will NOT be pleased to read this.

 

[nicnik]

To read the full text, you need to click on the top weblink, and then click on the weblink for the full piece in the NEJM.

Paywall. $20 or subscription.

 

[Bill Godshall]

To access the full text, click on the weblink entitled "Differential taxes for Differential risks . . . "
Then click on the weblink for the full "piece" in the NEJM.

 

[Lessifer]

Paywall. $20 or subscription.

Clicking on the "piece" hyperlink worked for me.

 

[nicnik]

Jessica99 has now posted her daily link, and it includes a link to an article on this by Gil Ross:

Taxes on nicotine products: can variable levels help stem the toll of smoking? - American Council on Science and Health

 

[nicnik]

To access the full text, click on the weblink entitled "Differential taxes for Differential risks . . . "
Then click on the weblink for the full "piece" in the NEJM.

Clicking on the "piece" hyperlink worked for me.

That just takes me to the pay or go away page. Might be browser incompatibility. I use Linux, and some web pages are not compliant with standards. It's Debian Linux, and their version of Firefox ins't fully compliant with Firefox's standards and they're no longer allowed to call it "Firefox". So it's probably a software problem rather than a brain malfuntion. I wouldn't rule out any cause, though, including some mysterious force telling me to take a break.

 

[Kent C]

That just takes me to the pay or go away page.

I like that. lol

 

[Lessifer]

While I don't agree with using taxes to promote/discourage lifestyle choices, it's good to see them acknowledge vaping as "low-risk." I wonder how they differentiate between "extremely low-risk" NRT and other "low-risk" products. There is also some faulty logic in believing that FDA regulation of vapor products under the FSPTCA will at all be beneficial.
"Perhaps most important, as proposed in the FDA's recent “deeming” rule, the agency's authority over tobacco products could be extended to cover additional products including ENDS, opening up such items to new regulation. Policymakers could then make a product's eligibility for a lower tax rate dependent on the FDA's determination that it poses substantially reduced risk"

The major flaw being that the FDA has refused to recognize any tobacco product as substantially lower risk.

 

[skoony]

just a discalimer.
Minnesota does not tax e-cig products other than the
standard 7.5% sales tax as a consumer product.
the way the law was written (in 2009 i believe)
only covers pre-filled cartridges and or any device
packaged with pre-filled cartridges such as a starter kit.
the law was written to have the wholesalers pay.
as it was written it was assumed that meant tobacco
wholesalers registered in the state. one little problem
was the tobacco wholesalers did not sell e-cigarette
products back then. out of state vendors or independent
distributors sold the product.there was and still is no
one to collect the tax from. current products such as
the tobacco company's own are being sold through
independent third party distributors not the tobacco
wholesalers.
there is a law on the books but,no way to collect the money.
any B&M in Minnesota that claims high prices are due to this
95% wholesale tax should send that money to me.
the state has no claim on it.
regards
mike

 

[Bill Godshall]

Although their commentary included a paragraph advocating the FDA deeming regulation (despite my repeatedly informing all authors since 2012/13 that the deeming regulation would ban >99% of e-cig products), and although some of their statements were inaccurate, this is an historic development within Tobacco Control.

For the past 30 and 20 years, Ken Warner and Frank Chaloupka respectively have been the most prominent and respected economists in Tobacco Control, with Chaloupka considered the leading Tobacco Control expert on taxation, and Ken Warner was previously chairman of the board of the American Legacy Foundation.

Basically, Sweanor convinced Warner and Chaloupka to all coauthor the piece, and Sweanor reluctanty agreed to go along with the absurd claims about FDA regulation, NRT products and other things (in order to get the article published calling for lower tax rates for lower risk tobacco/nicotine products).

So now there's a split in Tobacco Control on taxation policy, which should make it easier to defeat vapor taxes lobbied for by CTFK, ACS, AHA, ALA, which for the past decade have been lobbying (in lock step) to tax all OTP (and now e-cigs) at the same rate (based upon % of wholesale price) as cigarettes.

While I helped convince Chaloupka and CTFK to advocate for cigarette tax hikes (back in the early 1990's when I campaigned to increase PA's cig tax) and support CTFK's cigarette tax policy at
http://www.tobaccofreekids.org/research/factsheets/pdf/0146.pdf?utm
I've strongly opposed the decade old policy of CTFK, ACS, AHA, ALA to tax OTP at the same rate as cigarettes at
Campaign for Tobacco-Free Kids
and I've opposed ad valorum taxation (i.e. % of price) for OTP (because it further increases the already high tax every time the price increases).

Note that Chaloupka is heavily referenced in these CTFK tax policy documents, as CTFK has heavily relied upon Chaloupka for tax policy advice and data.

Another CTFK so-called fact sheet urges US Congress to increase the tax on all OTP to be the same rate as cigarettes (they absurdly call it 'tax parity') at
http://www.tobaccofreekids.org/research/factsheets/pdf/0354.pdf

 

[Lessifer]

Although their commentary included a paragraph advocating the FDA deeming regulation (despite my repeatedly informing all authors since 2012/13 that the deeming regulation would ban >99% of e-cig products), and although some of their statements were inaccurate, this is an historic development within Tobacco Control.

For the past 30 and 20 years, Ken Warner and Frank Chaloupka respectively have been the most prominent and respected economists in Tobacco Control, with Chaloupka considered the leading Tobacco Control expert on taxation, and Ken Warner was previously chairman of the board of the American Legacy Foundation.

Basically, Sweanor convinced Warner and Chaloupka to all coauthor the piece, and Sweanor reluctanty agreed to go along with the absurd claims about FDA regulation, NRT products and other things (in order to get the article published calling for lower tax rates for lower risk tobacco/nicotine products).

So now there's a split in Tobacco Control on taxation policy, which should make it easier to defeat vapor taxes lobbied for by CTFK, ACS, AHA, ALA, which for the past decade have been lobbying (in lock step) to tax all OTP (and now e-cigs) at the same rate (based upon % of wholesale price) as cigarettes.

While I helped convince Chaloupka and CTFK to advocate for cigarette tax hikes (back in the early 1990's when I campaigned to increase PA's cig tax) and support CTFK's cigarette tax policy at
http://www.tobaccofreekids.org/research/factsheets/pdf/0146.pdf?utm
I've strongly opposed the decade old policy of CTFK, ACS, AHA, ALA to tax OTP at the same rate as cigarettes at
Campaign for Tobacco-Free Kids
and I've opposed ad valorum taxation (i.e. % of price) for OTP (because it further increases the already high tax every time the price increases).

Note that Chaloupka is heavily referenced in these CTFK tax policy documents, as CTFK has heavily relied upon Chaloupka for tax policy advice and data.

Another CTFK so-called fact sheet urges US Congress to increase the tax on all OTP to be the same rate as cigarettes (they absurdly call it 'tax parity') at
http://www.tobaccofreekids.org/research/factsheets/pdf/0354.pdf

If I understand what you're saying correctly, that would still be dependent upon the FDA recognizing vapor products as Modified Risk Tobacco Products. Didn't they just deny Swedish snus that classification?

The paradigm shift among the authors is a good thing.

 

[Cool_Breeze]

I'm not sure it's good to talk about e cig 'risk.' Taxers might find justification is such expressions.

 

[nicnik]

The paradigm shift among the authors is a good thing.

That's the take home, for me.

 

[Lessifer]

I'm not sure it's good to talk about e cig 'risk.' Taxers might find justification is such expressions.

I don't think talking about vapor products as tobacco products is good either.

 

[skoony]

I don't think talking about vapor products as tobacco products is good either.

its not a good thing to talk about vaping as just another
tobacco product.
i have been saying for a while that the change over is happening
again.
1.tobacco smoke and second hand smoke.
2.toxins in the juice and the deadly addicting
child attracting nicotine.
3.new generation of tobacco products.
walah! we are just users of tobacco products.
they don't have to justify anything any more.
we all know tobacco products(cigarettes ) are
bad for you and the people around you.
we know we are not using tobacco products
but, they are not trying to persuade us.

regards
mike

 

[DC2]

If I understand what you're saying correctly, that would still be dependent upon the FDA recognizing vapor products as Modified Risk Tobacco Products. Didn't they just deny Swedish snus that classification?/

The FDA does not have the power to tax.

If the FDA would recognize ANY modified risk tobacco products, it might help.
But in the end, it is not up to the FDA who taxes what and how much.

 

[Lessifer]

The FDA does not have the power to tax.

If the FDA would recognize ANY modified risk tobacco products, it might help.
But in the end, it is not up to the FDA who taxes what and how much.

Right, I know that. The article is from TC economists who would be making suggestions to legislators on how to structure taxes to most effectively control tobacco usage. They are suggesting lower tax rates for lower risk products, however, the agency that would designate those products as lower risk would be the FDA, who seems unwilling to do so.

 

[caramel]

The concept of "taxes proportional to the risk of the product" is very interesting. Should it be applied to all products? If not, then why?

 

[Lessifer]

The concept of "taxes proportional to the risk of the product" is very interesting. Should it be applied to all products? If not, then why?

Why not, things like milk and vegetables could have no tax, unless you're allergic or lactose intolerant. We can install monitors in cars and the faster you drive, the more gas costs. Buying twinkies comes with a high tax, rice cakes are tax free, well, carbs, so not quite tax free.

I think you've stumbled upon the solution to America's budgetary issues.

 

[caramel]

Why not, things like milk and vegetables could have no tax, unless you're allergic or lactose intolerant. We can install monitors in cars and the faster you drive, the more gas costs. Buying twinkies comes with a high tax, rice cakes are tax free, well, carbs, so not quite tax free.

I think you've stumbled upon the solution to America's budgetary issues.

And those that didn't die out of smoking shall have their tobacco taxes reimbursed...