WASHINGTON, DC –(ENEWSPF)—April 30, 2015. Today, U.S. Senators Dick Durbin (D-IL), Richard Blumenthal (D-CT), Jack Reed (D-RI), and Barbara Boxer (D-CA) introduced the Tobacco Tax and Enforcement Reform Act (TTERA) to address illegal tobacco trafficking and tobacco product tax disparities, as well as deter consumers – especially among youth – from purchasing tobacco products by increasing federal tax rates on tobacco products.
Under current law, tobacco products are disparately taxed, enabling and incentivizing manufacturers to manipulate products so they can be classified in a lower-tax category. These tax inequities and loopholes not only sharply reduce federal revenues, but by lowering tobacco product prices, they increase overall tobacco use and health related harms. Additionally, illegal tobacco trafficking, in which “tax-free” black-market tobacco is sold at artificially low prices compared to legal tobacco, fuels increased consumption, increases tobacco-related illness and subsidizes criminal organizations trading in black-market tobacco – action which cheats the federal and state governments out of much-needed revenue.
“As history has shown us, Big Tobacco exploits regulatory loopholes to avoid oversight and increase use of their dangerous products. The current loopholes in the taxes on tobacco products encourage the use of products like smokeless tobacco as a cheap source of tobacco, particularly among young people. Unless we take action now, this problem will only get worse as tobacco manufacturers develop new tobacco products – like e-cigarettes – to continue gaming the system,” Durbin said.
“We know that tobacco use is the leading cause of preventable death, an unacceptable public health epidemic that kills almost half a million people per year,” said Blumenthal. “Incredibly, the tobacco industry continues to gain profits by taking advantage of tax loopholes that lead a new generation of young people to this deadly addiction. If smoking continues at the current rate among U.S. high school and middle school students, 5.6 million of today’s youth are expected to die prematurely from a smoking-related illness. Congress has a responsibility to protect the health of current and future generations, and this legislation will work to do this. By holding Big Tobacco accountable, ending tax loopholes and stopping illegal tobacco trade, we will help stop current users from smoking and young people from starting the lethal habit.”
“Tobacco products take a serious toll on public health and our budget. Congress must act to ensure our tax system reflects that,” said Reed. “These reforms will help prevent youth smoking and end unfair tobacco product tax disparities.”
“Tobacco products kill hundreds of thousands of people every year, and every year more and more young people become addicted to these dangerous products,” Boxer said. “This bill will close loopholes exploited by tobacco companies and save lives.”
“The Campaign for Tobacco-Free Kids strongly supports the Tobacco Tax and Enforcement Act introduced by Senator Blumenthal. The evidence is clear that increasing the price of tobacco products is one of the most effective ways to reduce tobacco use, especially among kids. By increasing tobacco taxes, Congress can protect children, improve health, save lives and reduce tobacco-related health care costs that total $170 billion a year,” said Matthew L. Myers, President of the Campaign for Tobacco-Free Kids.
In addition to the Campaign for Tobacco-Free Kids, the legislation is supported by the American Cancer Society and the American Lung Association.
Studies show that tobacco consumption falls when tobacco taxes rise – an effect which is greatest for youth, who are particularly price sensitive; this rise also generates billions of dollars in tobacco tax revenue for the federal government and states. The bill also eliminates the current tax rate disparities between certain tobacco products, adding billions more in revenue.
Specifically, the Tobacco Tax and Enforcement Reform Act:
Corrects tax rate disparities by taxing all tobacco products at the same relative level as cigarettes.
Increases the tax rate on cigarettes by 94 cents per pack and set tax rates for other tobacco products at an equivalent amount.
Requires that packages of tobacco products manufactured in or imported to the U.S. be uniquely marked to allow for tracking and tracing of tax payment.
Tightens and expands the permit and record-keeping requirements for those in the tobacco products distribution chain to prevent tobacco products from slipping through the cracks.
Addresses the problem of illegal tobacco manufacturing by requiring the registration of tobacco product manufacturing equipment.
Increases criminal and civil penalties for violations relating to tobacco product regulation.
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