The Tobacco Tax Equity Act of 2021 Is a Blunt Instrument
Harm reduction recognizes that people will, inevitably, engage in behaviors that may be risky and seeks to provide alternatives that reduce the risk associated with these behaviors. A harm reduction approach to tobacco product taxation involves ensuring that taxation levels are proportionate to the health risks of the product. This creates an incentive for people to choose less harmful products. Since the Tobacco Tax Equity Act of 2021 seeks to equalize taxes on all tobacco products, this legislation risks discouraging people from choosing less harmful products.
The Food and Drug Administration (FDA) has acknowledged that tobacco products exist on a continuum of risk, with combustible products representing the highest risk and other products falling lower on the continuum.[ii] There are two ways that the FDA communicates and certifies that a tobacco product presents a reduced risk compared to combustible cigarettes. Through granting a premarket tobacco product application (PMTA) order, the FDA acknowledges that the tobacco product is “appropriate for the protection of public health.”[iii] When granting a modified risk tobacco product (MRTP) designation, the FDA considers a more extensive list of criteria, including:[iv]
- The relative health risks associated with use of the product
- The risk of combustible cigarette users switching to the product rather than quitting tobacco use altogether
- The risk that non-tobacco users will begin using the product
- The risks and benefits of using the product compared to using approved cessation products (e.g. nicotine patches or varenicline)
As of April 2021, the FDA has granted twelve MRTPs that cover variations of two products. The first product to receive an MRTP designation was a smokeless tobacco product called General Snus. Snus is an oral tobacco product that comes in small pouches that the user places under their lip. The second product to receive an MRTP designation was a heat-not-burn product called IQOS, which heats sticks of tobacco enough to aerosolize the nicotine, but not enough to combust the tobacco, making it less harmful than combustible cigarettes. As of February 2021, there were an additional three products under review for MRTP designations by the FDA.
PMTAs and MRTPs align with harm reduction since they recognize that certain tobacco products are less harmful than others, and that some products may benefit public health if they help people quit smoking. One way that the Tobacco Tax Equity Act of 2021 could easily incorporate risk proportionate taxation is by including a carve out for products that receive a PMTA order and/or a MRTP designation.
The Tobacco Tax Equity Act of 2021 will tax all products with a PMTA or MRTP designation at the same level as deadly combustible cigarettes. Increased taxation is an established method of tobacco control; however, it can effect populations differently. One stated reason for wanting to tax smokeless products, including e-cigarettes, at the same level as combustible products is to discourage young people from initiating or continuing to use e-cigarettes. Yet, a 2020 study found that e-cigarette price was not associated with e-cigarette use among 15-21 year olds, and a 2021 study found that e-cigarette taxes were not associated with decreasing youth use.[v]
Among adults, several studies have shown that combustible cigarettes and e-cigarettes are substitute products.[vi] That is to say, when the price of combustible cigarettes increases, sales of e-cigarettes increase. One study showed that, while taxation lowered initiation and use of e-cigarettes among 25-34 year olds, it did not lower initiation among 18-24 year olds.[vii] Since most smokers establish the habit before the age of 26, this suggests that taxes discourage smokers from switching to e-cigarettes but do little to deter initiation among young adults.[viii]
Additionally, the results of a 2020 study suggest that a “national e-cigarette tax of $1.65 per milliliter of vaping liquid would raise the proportion of adults who smoke cigarettes daily by approximately one percentage point, translating to 2.5 million extra adult daily smokers” compared to no tax on vaping liquid.[ix]
After the 2009 federal tax increase on combustible cigarettes, one study found significant increases in Google searches for non-combustible products.[x] Independent search queries for ‘snus’ were 34 percent higher than expected during the eight weeks before and after the tax was announced. Searches for ‘e-cigarette’ were 75 percent higher than expected. These results suggest that rather than quitting smoking, combustible cigarette users seek to switch to alternative tobacco products.
A carve out for products with a PMTA order or MRTP designation does not have to mean that these products are exempt from taxation; however, a carve out should be sufficiently large to create an incentive for adults who use combustible products to switch to a less risky product.
Tobacco control can take many forms and does not need to exclude harm reduction approaches. Regarding the Tobacco Tax Equity Act of 2021, a more nuanced approach to taxation would be preferable to ensure that taxes are not discouraging people who smoke from choosing a less harmful product.
[i] “Durbin, Wyden, Krishnamoorthi, Colleagues Introduce Bicameral Bill To Reduce Tobacco Use In America.” Dick Durbin United States Senator Illinois, April 22, 2021. https://www.durbin.senate.gov/newsroom/press-releases/durbin-wyden-krishnamoorthi-colleagues-introduce-bicameral-bill-to-reduce-tobacco-use-in-america.
[ii] U.S. Food and Drug Administration. “FDA Announces Comprehensive Regulatory Plan to Shift Trajectory of Tobacco-related Disease, Death,” March 28, 2018. https://www.fda.gov/news-events/press-announcements/fda-announces-comprehensive-regulatory-plan-shift-trajectory-tobacco-related-disease-death.
[iii] U.S. Food and Drug Administration. “Premarket Tobacco Product Applications,” Sept. 11, 2021. https://www.fda.gov/tobacco-products/market-and-distribute-tobacco-product/premarket-tobacco-product-applications.
[iv] U.S. Food and Drug Administration. “Modified Risk Tobacco Products,” Feb. 22, 2021. https://www.fda.gov/tobacco-products/advertising-and-promotion/modified-risk-tobacco-products.
[v] Cantrell, Jennifer et al., “Impact of E-cigarette and Cigarette Prices on Youth and Young Adult E-cigarette and Cigarette Behaviour: Evidence from a National Longitudinal Cohort,” Tobacco Control, 29:4 (2020) pp. 374-380. https://pubmed.ncbi.nlm.nih.gov/31167900.
Choi, Kelvin et al., “E-cigarette-inclusive Smoke-free Policies, Excise Taxes, Tobacco 21 and Changes in Youth E-cigarette Use: 2017-2019,” Tobacco Control, (Feb. 25, 2021). https://pubmed.ncbi.nlm.nih.gov/33632806.
[vi] Pope, Derek A et al., “The Experimental Tobacco Marketplace: Demand and Substitutability as a Function of Cigarette Taxes and e-Liquid Subsidies,” Nicotine & Tobacco research: Official Journal of the Society for Research on Nicotine and Tobacco, 22:5 (2020), pp. 782-790. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7171289;Pesko, Michael F et al., “The Effects of Traditional Cigarette and E-cigarette Tax Rates on Adult Tobacco Product Use,” Journal of Risk and Uncertainty, 60:3 (June 24, 2020), pp. 229-258. https://pubmed.ncbi.nlm.nih.gov/33584006;
Yao, Tingting et al., “The Impact of E-cigarette and Cigarette Prices on E-cigarette and Cigarette Sales in California,” Preventive Medicine Reports, (Nov. 6, 2020), https://pubmed.ncbi.nlm.nih.gov/33240784;
Stoklosa, Michal et al., “Prices and E-Cigarette Demand: Evidence from the European Union,” Nicotine & Tobacco Research: Official Journal of the Society for Research on Nicotine and Tobacco, 18:10 (April 16, 2016), pp. 1973-1980. https://pubmed.ncbi.nlm.nih.gov/27085083.
[vii] Jun, Jungmi and Joon Kyoung Kim, “Do State Regulations on E-cigarettes Have Impacts on the E-cigarette Prevalence?,” Tobacco Control, 30:2 (March 22, 2021), pp. 221-226. https://pubmed.ncbi.nlm.nih.gov/32201383.
[viii] U.S. Centers for Disease Control, “Youth and Tobacco Use,” Dec. 16, 2020. https://www.cdc.gov/tobacco/data_statistics/fact_sheets/youth_data/tobacco_use/index.htm
[ix] Pesko, Michael F et al,. https://pubmed.ncbi.nlm.nih.gov/33584006.
[x] Jo, Catherine L et al., “US Consumer Interest in Non-cigarette Tobacco Products Spikes Around the 2009 Federal Tobacco Tax Increase,” Tobacco Control, 24:4 (Feb. 5 2015), pp. 395-9. https://pubmed.ncbi.nlm.nih.gov/24500270.