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S. 1314: Tobacco Tax Equity Act of 2021


Is the plan doomed to go up in smoke?

Context

E-cigarettes, also known as vaping, have become far more popular in recent years. The product now exceeds traditional cigarette usage among people under 30.

While there is a federal tax of just over one dollar per pack on traditional cigarettes, there is no federal e-cigarette tax, although 28 states and the District of Columbia have instituted taxes on e-cigarettes and vaping products. While these are mostly blue states, the list also includes a few red states such as Kansas, Louisiana, Utah, West Virginia, and Wyoming.

The federal tax on traditional cigarettes was last increased in 2009 through that year’s Children’s Health Insurance Program Reauthorization Act, one of the first laws passed by the Democratic-led Congress and signed by President Barack Obama. Due to inflation, the tax has lost more than 20 percent of its value since then.

What the legislation does

The Tobacco Tax Equity Act would establish a federal e-cigarette tax, increase the federal tax on traditional cigarettes to that same rate as e-cigarettes, and then peg both levels to inflation after that.

The House version was introduced on April 22 as H.R. 2786, by Rep. Raja Krishnamoorthi (D-IL8). The Senate version was introduced the same day as S. 1314, by Sen. Richard Durbin (D-IL).

What supporters say

Supporters argue that the legislation is a necessary public safety measure in response to the surging popularity of the product in the past few years.

“Loopholes in our tax code continue to favor big tobacco while the American public, especially our youth, pays the price,” Rep. Krishnamoorthi said in a press release. “The [bill] increases taxes on cigarettes and finally imposes taxes on the e-cigarettes hooking our children on nicotine, which would generate billions of dollars in federal revenue. As a father of a high schooler and middle schooler, I’m determined to make sure we end the youth nicotine and vaping epidemic.”

“Tobacco-related disease accounts for one out of every five deaths in America, and I know that story firsthand. Data shows that the most effective strategy to prevent children from starting this deadly habit is to price it out of their range,” Sen. Durbin said in the same press release. “This bill would help reduce tobacco and e-cigarette use by ending loopholes that the industry has exploited to target our children. If America can kick its nicotine addiction it would go a long way to improving our public health for generations to come.”

(Durbin’s statistic that about one in five American deaths are caused by tobacco is true, according to the Centers for Disease Control and Prevention.)

What opponents say

Opponents counter that the legislation would disincentivize traditional cigarette consumers from switching to the comparatively safer e-cigarettes, since the tax rates would be the same so they would no longer be saving money.

“The effort to tax all tobacco products at parity is based on the faulty premise that all non-medicinal nicotine-containing products are equally harmful, which is flat wrong,” Cliff Douglas, former vice president of tobacco control for the American Cancer Society and director of the University of Michigan Tobacco Research Network, said to Filter.

“Based on the science and public health concerns, Congress should differentially tax tobacco products to incentivize smokers to quit smoking — and for those who can’t or won’t stop using nicotine to switch to much less harmful products.”

(E-cigarettes are indeed less harmful than traditional cigarettes, though they’re still unsafe.)

Odds of passage

In 2019, Congress under a Democratic-led House and Republican-led Senate raised the tobacco purchasing age from 18 to 21, for both traditional cigarettes and e-cigarettes alike. Ostensibly, that may create an impression that even Republicans may be willing to establish parity between the two products under federal law.

Yet while that’s true for their purchasing ages, it doesn’t appear that’s true for their tax rates. The House version has attracted two cosponsors, both Democrats, while the Senate version has attracted eight cosponsors, all Democrats. It awaits a potential vote in either the House Ways and Means Committee or Senate Finance Committee.

This is at least the sixth version Sen. Durbin has introduced, none of which received a committee vote, even for versions introduced under Democratic-led Senates. The current version’s eight cosponsors ties the 2019 version for the largest Senate cosponsorship yet.

Last updated Jun 14, 2021. View all GovTrack summaries.

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 22, 2021.


Tobacco Tax Equity Act of 2021

This bill increases the excise tax on cigarettes and equalizes tax rates among all other tobacco products.