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Annette K. McClaveHealth Scientist, Epidemiology Branch
Michael A. TynanPublic Health Analyst, Policy Unit
CDC, Office on Smoking and Health
Smokeless Tax Policies Differences in Taxes on Cigarettes and Smokeless Tobacco
5th National Summit on Smokeless & Spit TobaccoSeptember 21, 2009
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Health Consequences of Smokeless Tobacco Use
Smokeless tobacco use can lead to nicotine addiction and other serious health consequences– Oral, pancreatic cancer
– Possible acute cardiovascular effects (e.g. Heart Rate, Blood Pressure)
– Adverse Pregnancy Outcomes
– Periodontal Disease
– May lead to cigarette smoking, delay quitting
• Adolescents who use smokeless tobacco are more likely to become cigarette smokers
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Smokeless Tobacco Use in the U.S.
More than 8.1 million Americans aged 12 or older (3.2%) are current smokeless tobacco users
Smokeless use has not declined since 2002
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2002 2003 2004 2005 2006 2007
Past month use of smokeless tobacco among persons age 12 and older in the U.S. – 2002 to 2007
Source: SAMHSA, National Survey on Drug Use and Health (2002-2007)
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Excise Taxes as a Policy Tool
Excise tax increases are a policy intervention recommended to reduce tobacco consumption by raising the price of tobacco products
– Surgeon General
– Institute of Medicine
– Community Guide
– World Health Organization
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Review from 2000 SGR
Economic studies tend to focus on the impact of cigarette taxes on consumption– 10% increase in price reduces use by 4%
Very little research exists on the impact tax increases may have on smokeless tobacco use
However, the existing research (though limited) shows higher smokeless tobacco prices are associated with lower smokeless tobacco use
Source: Reducing Tobacco Use: A Report of The Surgeon General (2000)
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Tax Imbalance
Historically, cigarette taxes have increased at a greater rate than smokeless taxes– Price of cigarettes rise more rapidly than
smokeless
This imbalance may also impact smokeless– Previous results show an imbalance in cigarette
and smokeless tax increases potentially results in higher smokeless tobacco use
If cigarette taxes continue to increase disproportionately, the gap between cigarette and smokeless prices will potentially increase
Source: Reducing Tobacco Use: A Report of The Surgeon General (2000)
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Indentifying Tax Imbalances
We reviewed state excise tax data available from Center for Disease Control and Prevention (CDC) and National Cancer Institute (NCI) legislative databases– CDC’s State Tobacco Activities Tracking and
Evaluation (STATE) System
– NCI’s State Cancer Legislative Database (SCLD) Program
Through Library of Congress research, we reviewed recent legislation to update the history of Federal excise tax increases contained in 2000 Surgeon General’s Report
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19171901
History of Federal Excise Tax Imbalance
Cigarette Excise
Tax Enactment
Sources: Reducing Tobacco Use: A Report of The Surgeon General (2000); Children’s Health Insurance Program Reauthorization Act of 2009.
1864 2009
2002
2000
1865
1866
1867
1868 1875
1883
1897
1898 1910 1919
1940
1942
1951
1983
1991
1993
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19171901
History of Federal Excise Tax Imbalance
Cigarette Excise
Tax Enactment
Smokeless Excise
Tax Enactment
Sources: Reducing Tobacco Use: A Report of The Surgeon General (2000); Children’s Health Insurance Program Reauthorization Act of 2009.
1864 2009
2009
2002
2002
2000
2000
1865
1866
1867
1868 1875
1883
1897
1898 1910 1919
1940
1942
1951
1983
1991
1993
1986
1991
1993
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Recent Federal Tax Increases
Product Previous Tax New TaxPercentIncrease
Cigars 20.719% 52.75% 154%
Cigarettes (pack of 20)
$0.39 $1.0066 158%
Snuff(per pound)
$0.585 $1.51 158%
ChewingTobacco (per pound)
$0.195 $0.5033 158%
Pipe Tobacco(per pound)
$1.0969 $2.831 158%
Roll Your Own(per pound)
$1.0969 $24.78 2159%
Federal tax increased on April 1, 2009
Most products increased by the same percentage as cigarettes, except for roll your own tobacco
Source: Children’s Health Insurance Program Reauthorization Act of 2009.
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History of State Excise Tax Enactments
By 1949, 43 states had established a cigarette tax
By 1969 every state had a cigarette tax
By 1949, only 12 states had a smokeless tax
Half of smokeless taxes were established after 1980– 7 states established a
tax in last 10 years
– No smokeless tax in Pennsylvania
Took an average of 31 years after a state established a cigarette tax to establish a smokeless tax
State Cigarette Taxes State Smokeless Taxes
Sources: National Cancer Institute’s State Cancer Legislative Database Program; Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.
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State Excise Tax Increases 1995-2008
Between 1995 and 2008 there were 107 separate state cigarette excise tax increases
Between 1995 and 2008 there were only 24 state smokeless excise tax increases
State Cigarette Taxes State Smokeless Taxes
Source: Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.
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State Tax Increases in 2009
So far this year, 12 states have enacted tax increases on cigarettes
10 of these states have also increased the tax on smokeless products
4 other states have increased the smokeless tax without increasing the cigarette tax
State Cigarette Taxes State Smokeless Taxes
A promising start?
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AZ
WY
OR
ID
MT
UTNV
WA
CA
TX
AROK
ND
LA
KS
IANE
SD
CO
NM
MO
MN
TN
AL
KY
OH
MS
MI
IN
GA
FL
PA
ME
NY
WV VA
NC
SC
VT
CT
D.C.
RI
NJ
MD
DE
NHMA
IL
WI
AK
HI
Cigarette Tax Increased(n=2)
Smokeless Tax Increased(n=4)
No Change in Tobacco Taxes(n=35)
Both Cigarette and SmokelessTax Increased (n=10)
Note: DC is included among results for states.
2009 State Tobacco Excise Tax Increases
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Issues with Smokeless Excise Taxes
There is no uniform method to tax smokeless products– Federal smokeless tax is based on weight
– States smokeless taxes are based on:
• percentage of price (most common for smokeless)– sales price/purchase price
– wholesale price
– manufacturer sales, list or invoice price
• by weight (most common for snuff)
• percentage of product value or gross receipt of sales
Various methods in taxation complicate evaluation
Source: Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.
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Other Policy Gaps: Graphic Warning Labels By June 2010 new text
warnings will be required for smokeless
– comprise 30% of package
By September 2012, new graphic warnings required for cigarettes
– comprise the top 50% of the front and back of a pack
Graphics allowed, but not required for smokelessSource: Family Smoking Prevention and Tobacco Control Act of 2009
Image: Health Canada
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Annette K. McClave [email protected] Scientist, Epidemiology Branch
Michael A. [email protected] Health Analyst, Policy Unit
CDC, Office on Smoking and Health
Smokeless Tax Policies Differences in Taxes on Cigarettes and Smokeless Tobacco
The findings and conclusions in this presentation are those of the author and do not necessarily represent the official position of the Centers for Disease Control and Prevention.