Thursday, May 24, 2018

Kentucky Adopts a Rational Tobacco Tax Plan


Last month, the Kentucky legislature overrode Governor Matt Bevin’s veto and passed HB366 (here), a tax reform bill that increased cigarette excise taxes from $0.60 to $1.10, while leaving taxes on smokeless products unchanged and leaving e-cigarettes with no excise tax.

This policy mirrors the tax plan that my research group designed (here) – one endorsed by 16 tobacco research and economic policy experts from across the nation, and by the Pegasus Institute (here).  Watch my interview with Nick Storm of Spectrum News here to learn more.

Enacting this plan, legislators rejected demands from anti-tobacco crusaders to double the cigarette tax increase and make vastly safer smokeless and e-cigarettes equally expensive.  One of their spokesmen, Foundation for a Healthy Kentucky president Ben Chandler, had argued, “you’ve got to have the sticker shock…” (here)

That reasoning is both insensitive and nonsensical.  Many Kentucky smokers are unable or unwilling to quit tobacco and nicotine entirely.  For them, traditional quit-smoking methods, which strive for nicotine and tobacco abstinence, don’t work. 

Our tax plan encourages and incentivizes smokers to quit or switch to less expensive and vastly safer smoke-free tobacco products, including smokeless tobacco and e-cigarettes. 

Decades of epidemiologic studies document that the health risks of dipping and chewing tobacco are, at most, a mere two percent of those associated with smoking.  Unlike cigarettes, smokeless tobacco does not cause lung cancer, heart and circulatory diseases or emphysema.  A recent study conducted by federal researchers and experienced epidemiologists found that men who dip or chew tobacco have no excess risk for mouth cancer (here).    

Our plan also encourages smokers to switch to e-cigarettes, which already are among the most common – and most successful – quit aids in the U.S. (here). 

HB366 contains another provision favoring reduced risk products.  Kentucky excise taxes will be reduced by half for products that are permitted by the FDA to be marketed as “lower risk.” 

Reduced risk applications have already been filed with the FDA for three products: IQOS heat sticks, Camel Snus and Copenhagen moist snuff.  Science tells us that all of these are vastly safer than cigarettes.  The question is: When will the FDA acknowledge this indisputable fact?


1 comment:

David Sweanor said...

The move by Kentucky to differentiate taxes based on different risks is terrific news. I have worked globally on tobacco tax issues as a public health advocate since the 1980s and along with several others with an interest in risk-proportionate regulation, I commented on and supported the proposal. Brad, you and the others involved deserve much credit.

While taxation is a powerful tool in shaping behavior, efforts to tax everything the same ‘to avoid switching’ (as endorsed by many anti-tobacco groups) is a blunt and far less effective tool. A huge majority of those motivated to ‘just quit’ are back on nicotine shortly, and in the absence of nudges are usually back on cigarettes.

I am particularly pleased to see the following language from pages 80-81 of the relevant revenue bill:

"The General Assembly recognizes that increasing taxes on tobacco products should reduce consumption, and therefore result in healthier lifestyles for Kentuckians. The relative taxes on tobacco products proposed in this section reflect the growing data from scientific studies suggesting that although smokeless tobacco poses some risks, those health risks are significantly less than the risks posed by other forms of tobacco products. Moreover, the General Assembly acknowledges that some in the public health community recognize that tobacco harm reduction should be a complementary public health strategy regarding tobacco products. Taxing tobacco products according to relative risk is a rational tax policy and may well serve the public health goal of reducing smoking-related mortality and morbidity and lowering health care costs associated with tobacco-related disease."


This is good health policy. Congratulations to Kentucky legislators for the leadership they have shown. I hope good policy proves to be contagious!