Taxing New Tobacco Products: Strategies and
Challenges in the States
Nathan Bush
Vice President of Government Relations
Taxing Smokeless Tobacco:
Offensive and Defensive Campaigns
• Some campaigns will allow you to play
offense and control the policy
• Others will force you to scramble to slow
up or kill a bad bill
• A simple weight-based taxation bill (or
existing statute) is your enemy
• If you are forced to assume a defensive
posture and educate lawmakers for the
first time on this issue mid-session, the
cards will be severely stacked against
you
Taxing Smokeless Tobacco: The
Public Health Campaign Approach
• Manage your effort like the public health
campaign it is
• Recruit local and national partners
• Don’t reinvent the wheel
• Always use combination of facts and
personal stories to make your points
• Quality anecdotes can be gamechangers for lawmakers
• Don’t assume decision-makers know
anything about smokeless tobacco or
how to properly tax it – educate them!
Taxing Smokeless Tobacco:
Getting Organized
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Research local and national data
Know your policy talking points
Focus on health
Determine coalition resources and
member roles (stick together on this!)
• Show decision-makers examples of
these new, flavored products (they will
be shocked!)
• Know your opposition’s (e.g., UST’s)
policy talking points
Taxing Smokeless Tobacco: The
Public Health Campaign Approach
Problem Statement:
Taxing all forms of smokeless tobacco
(and/or moist snuff) by a simple weightbased tax lowers the comparative price
of the brands most popular with youth.
Smokeless Tobacco and Cancer
The American Cancer Society notes that all
forms of oral tobacco contain chemicals
known to cause cancer (carcinogens).
These products can cause cancer of the
mouth, pancreas, and esophagus.
Prepare Yourself:
Research Good vs. Bad Policy
• Simple weight-based taxes are bad for health and
bad for state revenue, especially over the longterm
• New generations of smokeless products tend to
weight a LOT less, therefore subject to lesser tax
in a weight-based scheme
• UST will try to couch a switch to weight-based
taxes as a good way to raise taxes & a public
health win
• UST will try to use traditional public health
arguments against you (e.g. “kids are victims of
other brands’ low-priced tobacco”)
• You must be prepared to demonstrate the truth:
kids prefer UST products
Brand Preferences:
Percentage of Youth Users
Weight-Based Taxation is a Bad Strategy
Because It Promotes Harmful
and Very Popular Products
• The smokeless tobacco industry likes to
promote the use of smokeless tobacco
as an alternative to smoking cigarettes.
• The smokeless tobacco industry
suggests that the use of smokeless
tobacco will help smokers quit.
• WARNING: THERE ARE HUGE
PROBLEMS WITH THIS TYPE OF
MARKETING BY THE INDUSTRY
Weight-Based Taxation is a Bad Strategy
Because It Promotes Harmful
and Very Popular Products
• Smokeless tobacco is not a safe
alternative to smoking cigarettes.
• Increased marketing by the industry
leads to an increase in the number of
new users, including youth users
• FDA-approved smoking cessation aids
are safe and increasingly available.
Smokeless Tobacco Promotion
Via Weight-Based Taxation is
Not a Public Health Strategy
•
http://www.npnweb.com/uploads/featurearticles/2007/npnMarketPulse/011707_mp1.asp
(Web page information excerpted and printed 1-28-07)
Study: Moist tobacco does better where tax
is weight-based
Moist smokeless tobacco volume is increasing faster in states employing a
weight-based excise tax versus states that use an Ad Valorem tax, according to
an analysis by Willard Bishop, a consulting firm in Barrington, Ill.
Only nine states use a weight-based tax, Willard Bishop said Jan. 16 in releasing
results of its analysis. Those nine reported volume can growth of 10.7 percent for
a 13-week period in 2006 compared to the same period in 2005 (see table).
In the states with Ad Valorem tax, volume can growth was 7.5 percent, according
to the firm’s analysis. Ad Valorem tax is typically expressed as a percentage of
the wholesale price.
Smokeless Tobacco Promotion
Via Weight-Based Taxation is
Not a Public Health Strategy
• Long-term ACS “Switchers Study”
(Henley et al. 2007) determined that
premature death was more likely for men
who switched from cigarettes to
smokeless compared to those who quit
smoking with no other tobacco use
• 2009 report from HHS/SAMSHA
confirmed that smokeless use is
increasing among adolescent males
• “Dual Use” can interfere with tobacco
cessation, especially when the industry
promotes switching
Planning Your Strategy:
Know Who The Players Are
• Big Tobacco companies dominate this
market but they cannot rightfully make
legitimate health claims
• UST / Altria
• Conwood / Reynolds American
• Other players, other products entering
the market at various price points and
stoking competitive (and legislative)
flames between tobacco companies
Preparing Your Strategy:
Know Your Opposition
• UST is an aggressive company with
ambitious legislative goals
• UST is now owned by Altria (parent
company of Philip Morris)
• UST continues to dominate the market
alongside other high-end Altria brands
like Marlboro snus
• UST has a checkered past
Preparing Your Strategy:
Know Your Opposition
Preparing Your Strategy:
Know Your Opposition’s Opposition
• Market share domination is the #1 objective of
competing tobacco companies
• Conwood & RJR are strategic enemies of UST
& Altria on this issue
• Only UST will benefit from simple weight-based
taxes (now with the backing of Altria)
• No need to collaborate with the industry – just
make the health arguments, and leave the rest
to tobacco industry infighting
• Do not appear to be aligned with any one
tobacco company’s interests: you must be the
voice of reason and the voice of health
Do Your Homework:
Inform Your Lawmakers
• Beware of UST’s bad habit of recruiting
otherwise quality tobacco control legislative
champions for their weight-based scheme
• Your job is to preemptively educate lawmakers
and relevant tax/revenue policy analysts
(display actual products – and applicable
weights – if possible)
• Do not be swayed by offers of revenue
enhancements for public health programs
courtesy of UST and their weight-based
scheme
• If your state has a price-based moist snuff tax,
it is only a matter of time before UST shows up
at your capitol
Thank You!
For campaign assistance, please contact:
Kelley Daniel
Senior Representative – State and Local Campaigns
American Cancer Society Cancer Action Network
kelley.daniel@cancer.org