New proposed federal tax (user fees) on e-cigarettes

[Mazinny]

Trump Wants to Tax Your Juul

President Donald Trump's budget proposal would make vaping more expensive by targetting e-cigarettes with a new "user fee" intended to generate $100 million annually.

The tax would fund regulatory programs and public health campaigns run by the Food and Drug Administration's (FDA) Center for tobacco Products—despite the fact that there is no tobacco used in e-cigarettes, which instead use nicotine-laced fluids. Cigarettes, cigars, and chewing tobacco are already subject to the FDA's user fees.



https://www.whitehouse.gov/wp-content/uploads/2019/03/budget-fy2020.pdf

Tackles the Epidemic of Youth E-Cigarette Use. The Budget includes a new user fee on e-cigarettes and other electronic nicotine delivery system products and proposes new FDA authority to collect user fees in support of its regulatory oversight of new tobacco and nicotine related products in the future as appropriate. The proposal would amend current law to add e-cigarette manufacturers and importers to a list of product categories subject to the user fee. The FDA’s annual user fee cap of $712 million would be increased by $100 million and future collections of all tobacco related products would be indexed to inflation. This proposal would ensure that FDA has the resources to address today’s alarming rise in youth e-cigarette use as well as new public health threats of tomorrow. New tobacco or nicotine products that are regulated by FDA should also pay a user fee, just as other to-bacco related products that are subject to FDA’s user fee.

 

[Shawn Hoefer]

Ya know... IF this gets the FDA off our backs, I'm kinda OK with it. If you figure there are roughly 40,000 B&M shops in the US, and around 1,000 distros, and 1,000 juice manufacturers, and 1,000 online retailers, and another 1,000 manufacturers... Say 46,000 total entities... That comes out to a little less than $2200 per year, per entity. On a sliding scale, smaller shops would pay a bit less, and bigger shops would pay more. Manufacturers, the same way. That small an annual amount could pretty easily be absorbed and passed along as a general piddly 2% price increase... A small price to pay IF it'll get the FDA off our backs.

Note the all capital IF used twice...

 

[zoiDman]

Here is some More Information regarding Tobacco User Fees.

Tobacco User Fees

And take Special Notice to Portion (2)(B)(iii) and (2)(B)(iv) of Section 919 of the FD&C Act below...

Section 919 of the Federal Food, Drug, and Cosmetic Act - User Fees

 

[Rossum]

Ya know... IF this gets the FDA off our backs, I'm kinda OK with it. If you figure there are roughly 40,000 B&M shops in the US, and around 1,000 distros, and 1,000 juice manufacturers, and 1,000 online retailers, and another 1,000 manufacturers... Say 46,000 total entities... That comes out to a little less than $2200 per year, per entity. On a sliding scale, smaller shops would pay a bit less, and bigger shops would pay more. Manufacturers, the same way. That small an annual amount could pretty easily be absorbed and passed along as a general piddly 2% price increase... A small price to pay IF it'll get the FDA off our backs.

Note the all capital IF used twice...

Two words: Protection Racket.

 

[zoiDman]

...

Note the all capital IF used twice...

That is Kind a BIG "if"

And I would say the Chances of the FDA easing up on e-Cigarettes are about the same as the Passage of a Balanced Budget.

About the Only thing that would at least Pause the Clock on e-Cigarettes (IMO) is if Miraculously teen usage rates Plummeted. But that Won't happen until the FDA takes an action and then the CDC/NIH makes up some Data to support it.

 

[bombastinator]

This sort of makes sense in a weird way. Of the hateful triumvirate (BT, BP, and the anti-smoking NGOs) BT gets to dump on ecigs, BP gets paid to do research, and the NGOs get that drop in funding caused by fewer smokers reversed.

We all get screwed of course, but how is that new?

 

[ScottP]

This is all assuming this "proposal" actually passes the current Congress and I just don't see the Democrat controlled House passing anything that Trump proposes.

 

[bombastinator]

This is all assuming this "proposal" actually passes the current Congress and I just don't see the Democrat controlled House passing anything that Trump proposes.

Chuck Schumer is on the warpath about kids and ecigs though. He’s not without power. I do wish I knew more about that CDC report he’s basing his attitudes on.

 

[Coyote628]

In the United States its called lobbying. Everywhere else its called bribery and corruption.

 

[scott58]

Once again we get the lesser of 2 evils.

 

[ScottP]

Chuck Schumer is on the warpath about kids and ecigs though. He’s not without power. I do wish I knew more about that CDC report he’s basing his attitudes on.

Chuck's attitude has nothing to do with a CDC report and everything to do with the fact his state (NY) is in imminent danger of defaulting on bonds they issued that were backed by the tobacco settlement money.

(Yes this is from 2012 but it is still a problem and why many states still want to see ecigs go away)
State Bonds Backed by Tobacco Payments in Jeopardy of Default

New Jersey, California, New York City and Virginia would be several billion dollars short on tobacco bonds maturing in the years after that

Note: The year referred to in the above quote is 2024.


The whole thing seems to be setup like a Ponzi scheme and at some point, without tobacco money, it will collapse. If it does the investors are going to be out for blood and people like Chuck are going to be the ones with their heads on the chopping block. So he is HIGHLY motivated to either completely banish ecigs or at least try to find a way to make up the tobacco shortfall with them.

Honestly if some scientist conducted a study that 100% proved ecigs could actually CURE cancer, CURE Alzheimer's, CURE Polio, and a dozen other diseases, with what some of these politicians stand to lose, I wouldn't be shocked if that report got buried in the same grave with the scientist that tried to published it.

 

[ppeeble]

Good grief...

I propose additional taxes on shoelaces. The revenue generated from this tax will be used to combat the high levels of shoelace abuse currently being reported by myself.
Or how about....
Due to the rise in children using mobile 'phones i propose a super-tax, the proceeds of which will be used to pay for the education of children into how to not use mobile 'phones. This tax should raise approximately 300 times the cash we actually need for this bogus epidemic.

I just wish there was a politician out there who would come out and say 'we need more tax revenue so we're going after the little guy because what are they gonna do' ?

 

[zoiDman]

And so it Begins...

Statement from FDA Commissioner Scott Gottlieb, M.D., on advancing new policies aimed at preventing youth access to, and appeal of, flavored tobacco products, including e-cigarettes and cigars

https://www.fda.gov/downloads/TobaccoProducts/Labeling/RulesRegulationsGuidance/UCM633281.pdf

 

[Jazzman]

Taxation of vaping (as detestable as it is) will actually have a stabilizing effect on the vaping industry. If enough revenue is generated from the taxes then it can't be allowed to die because of the loss of that revenue. Cigarettes are a good example of this. No one, not even smokers at this point, would argue smoking is a healthy activity and yet it continues due to revenues not only from fed, state, and local taxes but also from the need to keep the settlement money coming in.

The hard part of this is that taxes never go away, will continue to rise as fed, state, and local taxes try to find a way to maximize the squeeze that can be applied before demand starts to drop off because of too high taxation. It's not just a binary decision to tax or not tax. It's a careful calculation of how to extract the maximum benefit to the tax collection entities, and over how long a period of time and the rise rate need to keep the taxation rate as high as possible without the demand slowing down causing revenue loss.

Overall, the amount of revenue collected if high enough will even win over the "For the children" argument by the policy makers because with government revenue will always outweigh the good of the people... even the children.

 

[ScottP]

No matter how high they raise taxes, at some point, they WILL run out of other people's money to spend.

 

[bombastinator]

In the United States its called lobbying. Everywhere else its called bribery and corruption.

People have tried to corral lobbying before. The problem it seems is the primary unit of currency in lobbying is information, which is something legislators actually have very little access to. Legislators hate lobbying even more than the public does but the situation is arranged so that they literally cannot do their jobs without it. In order to control lobbying what has to happen first is legislators need ways to get information themselves.

 

[Jazzman]

No matter how high they raise taxes, at some point, they WILL run out of other people's money to spend.

Exactly... then the government will have ALL the money! A true socialist ideal.

 

[bombastinator]

Taxation of vaping (as detestable as it is) will actually have a stabilizing effect on the vaping industry. If enough revenue is generated from the taxes then it can't be allowed to die because of the loss of that revenue. Cigarettes are a good example of this. No one, not even smokers at this point, would argue smoking is a healthy activity and yet it continues due to revenues not only from fed, state, and local taxes but also from the need to keep the settlement money coming in.

The hard part of this is that taxes never go away, will continue to rise as fed, state, and local taxes try to find a way to maximize the squeeze that can be applied before demand starts to drop off because of too high taxation. It's not just a binary decision to tax or not tax. It's a careful calculation of how to extract the maximum benefit to the tax collection entities, and over how long a period of time and the rise rate need to keep the taxation rate as high as possible without the demand slowing down causing revenue loss.

Overall, the amount of revenue collected if high enough will even win over the "For the children" argument by the policy makers because with government revenue will always outweigh the good of the people... even the children.

I wouldn’t even mind ecig taxes if the money were used for actual research on them. Public research is something the USA seems bent on trying to stamp out though.

 

[searcher]

I'm glad to say that if I never spend another dime (barring an unforeseeable disaster like a major earthquake in the Mississippi valley) I can make it to age 105 without paying that tax. If my nic in the freezer goes bad, I guess I'll try 0 nic. I found a bottle of 36mg in my storage box last week that was bought in 2010 and never refrigerated. I thought WTH I'll try it. I mixed 10ml of coffee with it (3mg), and vaped it yesterday. No problems.

 

[Jazzman]

I wouldn’t even mind ecig taxes if the money were used for actual research on them. Public research is something the USA seems bent on trying to stamp out though.

You mean the money from the collected taxes that was promised to help people get off smokes and the money to fund ecig research. You're right... funny how that works isn't it? /s