A New Tax Policy Principle: Harm Reduction

Source: Legislative Services Presentation

Despite a long tradition of taxing traditional tobacco products, Virginia should not now tax the alternative products from the same industry based on nicotine-laced heated liquids because they serve the high social purpose of harm reduction, legislators were told Tuesday.

Carrie L. Wade of the R Street Institute, who never quite stated who had paid her to be there, told a meeting of the General Assembly’s Joint Subcommittee to Evaluate Tax Preferences that “good state regulation” of these products would “treat combustible products differently than non-combustible products” and “send a public health message through differential tax rates.”

The United Kingdom, Japan and Sweden have all found that nicotine delivery without benefit of fire has moved people away from cigarettes, she said.  In Sweden the product mentioned was smokeless tobacco inserted in the mouth, which is illegal in the European Union.  Asked why it was banned by the EU, she didn’t quite answer.

The reason of course is mouth cancer.

Having made uncounted billions selling a deadly and addictive product that King James I and Mary Baker Eddy understood could kill and having addicted government at all levels to the related tax revenue, the industry is now arguing that its newest and possibly slightly-less-deadly products should be tax free or at least taxed far less.

This being Virginia, where tobacco leaves decorate the House chamber ceiling, the assembled legislators listened patiently.  Lobbyist Reginald Jones on behalf of Altria was up immediately following Wade, mentioning his client’s 3,700 Virginia employees and billions in sales and its downtown Richmond research center now focused on “heated products” which are “less harmful products.”   He too used the new key phrase:  harm reduction.

Jones was deeply appreciative that the committee would consider this issue, but it was merely responding to a mandate slipped into the state budget, a small item sponsored by Senate Finance Committee Chairman Emmett Hanger.  “I view this as the beginning of a process,” said Hanger.   Some lobbyist certainly handed him that language and requested its insertion, perhaps the same one so grateful to be there.

Over the years I’ve devised several laws to explain the world of politics and government, and today I formulated a new one:  the more obscure a budget language provision, the more delayed its appearance into the sunlight, the more interesting it will turn out to be.  This legislative study committee was created to trim the instances of special tax treatment in Virginia law, but this discussion was all about preserving or enhancing one.  That’s the kind of lobbying creativity that produces the big bucks.  Scores of lobbyist meters were running in the room.

Virginia does not now tax these vapor products except for the standard sales tax.  Traditional tobacco products suffer an additional excise tax at the state level (the second lowest in the country) and in most cities and towns.  The local taxes can be higher than the state tax and the patchwork of more than 100 different tax authorities has always annoyed the industry.  Customers can usually go a short distance to another locality for lower-tax product.  That is in part what the budget language meant by “modernization.”

Combined the state and local levies produce about $200 million in revenue, but the amount has been dropping steadily as tobacco use declines, in part due to switchers to vaping and also because new state laws reduced cigarette smuggling from Virginia to high-tax states.  Over the past few sessions a handful of bills – all quickly killed – have proposed extending taxes to vapor products.

The most recent, House Bill 2056 in 2017, proposed a five cent per milliliter (or about $1.50 per ounce) tax on the liquid and a ten percent tax on the various devices to use it, such as those pictured above.  Seven other states and the District of Columbia are already taxing one or the other, but usually not both.

Delegate Mark Keam of Vienna was one of those most engaged in the conversation and, after assuring everyone he thought what informed adults did in this area was fine with him, asked if there had been previous discussions of whether or how to tax these increasingly-attractive products.  Not really, he was told.  As noted any previous bill had never even gotten a vote in committee.

Wade also argued against any effort to regulate the use of attractive flavorings in the products.  Adults are just as fond of them as younger users, and hence they are an element of harm reduction.  “We want to keep these products away from kids, but we think we can do that with existing regulations,” she said.

As Virginia contemplates special taxing treatment, the Food and Drug Administration is on the warpath over the explosion of these products among young people.  Given how the industry marketed cigarettes as healthy and featured doctors in their advertising, perhaps these new health claims should be viewed with at least a little suspicion.

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16 responses to “A New Tax Policy Principle: Harm Reduction

  1. Your writing provokes thought! Thanks!

    Perhaps I’m wrong but this sounds a little bit like the argument that decriminalizing marijuana will (pick your view) 1. – divert folks from more addictive and deadly opioids OR 2. become a gateway to much more harmful drugs.

    I have no clue what the data is for vaping but it would affect my thinking. If it truly diverts folks from cigarettes in high numbers than if no vaping versus it brings non-smokers to vaping who then graduate to cigarettes.

    The other way to look at this is as a “sin” tax where the “sin” is that people do things that are harmful to themselves then go running to the government for medical care – like Opioid Addiction help or lung cancer help.

  2. Well, if we enshrine “harm reduction” as a tax policy principle, can special treatment of diet soda or light beer be far behind? I’m actually impressed by this creative argument, but I’ve been to too many smoker’s funerals to buy any claim this is about health. However they choose to tax nicotine products, they should all be taxed roughly the same. Don’t make them attractive.

  3. The smoking vs. vaping issue is a very real one in our household. Much to the consternation of his mother and me, my son smokes cigarettes. (Neither of us has ever smoked, and we always preached against the evils of smoking… but kids like to assert their autonomy in stupid ways, I guess.)

    My son argues persuasively — persuasive to me, not his mother — that vaping is a much less harmful practice. Vaping sticks are nicotine delivery devices stripped of the noxious chemical soup found in cigarette smoke. He likes the nicotine as well as the activity of smoking. Maybe there is still some health risk — you pointed to evidence of mouth cancer — but it is much lower than the risk from smoking cigarettes.

    If we accept the proposition that vaping is less harmful than smoking, public policy need not encourage the activity, but it certainly should not discourage people from making the switch. Cost is an issue. One reason my son smokes cigarettes far more than he vapes is that vaping is more expensive. Increasing the tax would only compound the cost disadvantage. That makes no sense to me.

    And one more thing… Vaping is less noxious to others than smoking. Cigarette smoke is disgusting. I can’t stand getting inside my son’s car, it smells so bad.

    • He has a smart mother.

      I’m sure the industry could adjust those prices if it chose to. The profit on vape products must be incredible. Information about the relative prices was not discussed yesterday at all.

      • Yes, the mothers are most always the smart ones!

        And they are the wise ones too.

        Mother’s know that the sure sign of a corrupt government is one that encourages its young to sin in order to tax sin, for elite advantage.

        Everywhere you look our governments and our public institutions are selling our citizens terrible habits to gain power and advantage for the elite who run those governments and public institutions.

        Is there no end to this?

        Imagine a lottery win card worth $1.6 billion paid for out of the pockets of the poor bankrupting themselves daily.

        At least the Camel’s ads where honest, building their commercial brand with the idea that More Doctor’s Smoke Camels only to earn a profit for their commericial product.

        Now, however, we got governments and non-profit public universities selling the hookup culture, and noxious hate filled garbage disguised as an education in skills and learning on which to build a kids future, when instead it kills the future of innocent families and students, destroys their confidence, and character, and fills them with hate and ignorance, all to make those running the sick show we call governance and education today ever powerful, controlling, dominant, and rich.

        Everywhere you look our institutions peddle sin, spin, and cultural garage to our youth and all good people, the citizens they are bound to serve, but take advantage of instead. Its a sick cesspool society we live in. And we have now a clue. Are surprised when cultures start filling our skies, circling and circling now, endlessly overhead, waiting, waiting, waiting.

        Now, only the mothers know what is going on, their children threatened.

        • A few typos corrected in 2nd to last paragraph:

          Everywhere you look our institutions peddle sin, spin, and cultural GARBAGE to our youth and all good people, the citizens they are bound to serve, but take advantage of instead. It’s a sick cesspool society we live in. And we have NOT a clue. Are surprised when the VULTURES start filling our skies, circling and circling, endlessly now circling overhead, waiting, waiting, waiting.

    • I’m truly sorry you have a son who has gone in that direction. I’m a cigarette smoker of many years ago and I once knew someone who smoked AND went jogging every day to “compensate”!

      I sort of get away from the concept of a “disgusting habit” and directly to the health issue. I think the TV ads showing people with holes in their throat and what their lungs look like at autopsy.. etc and they should do more.. they should very overtly point out that COPD and many who have to tote around oxygen are largely the results of cigarette smoking.

      It’s a horrible way to try to stay alive and I sort of equate those who smoke and believe it won’t affect THEM the same way others are in denial about burning fossil fuels.. Both types find a way to not believe it will happen and that it’s “not proven” which also points out how the Cigarette companies spend years and billions to impugn the science – very effectively to the point where we still have people who downplay the very deadly aspects of cigarette smoking and/or think vaping is having the enjoyment and evading the harm.

      I don’t have a problem putting a high tax on BOTH – … AND requiring that ALL of the tax goes specifically to pay for MedicAid folks who smoked and got diseased.

      I’m still agog that ANY offspring of Jim B would smoke! GAWD!

  4. re: ” Well, if we enshrine “harm reduction” as a tax policy principle, can special treatment of diet soda or light beer be far behind? I’m actually impressed by this creative argument, but I’ve been to too many smoker’s funerals to buy any claim this is about health. However they choose to tax nicotine products, they should all be taxed roughly the same. Don’t make them attractive.”

    well… if we look at the taxpayer-funded health care for people who smoke or are obese/have diabetes etc… then why not combine the tax to a dedicated purpose like health care?

    That’s a legitimate and fair nexus and it actually gets to the idea of why we have to pay for entitlements for people who abuse their own health.

  5. Just out of curiosity, where do they get nicotene supply for vaping? Is it made artificially, or extracted from tobaaco?

    • From tobacco I presume. Good question, though. If it is synthetic, yet another hit to rural Virginia’s economy!

      • …”Nicotine can be synthesised but this is a very costly process, hence all pharmaceutical nicotine including that found in eliquid is extracted from a member of the tobacco family, but not the one grown for smoking or oral tobacco.”

  6. Wow. I guess where profits are involved, we get all sorts of alternative facts from the industries that benefit from distorted information. There are not a lot of studies that have been done on the effects of vaping, but here is what they show so far:

    Although e-cigarettes contain nicotine, they are being marketed as a safer alternative to smoking, but they are still dangerous.

    1. Nicotine negatively affects adolescent brain development. One Juul pod has as much nicotine as a pack of cigarettes.

    2. Side effects of using e-cigarettes include increased heart rate, higher blood pressure, lung disease, chronic bronchitis, and insulin resistance leading to type-2 diabetes.

    3. The vapor exhaled by by e-cigarette users contains carcinogens and is a risk to nearby nonusers just like secondhand tobacco smoke.

    4. Almost 60% of people who use e-cigarettes also smoke according to the CDC. Some research has shown that vaping may help some adults quit smoking, other studies found that vaping might encourage teens to start smoking.

    5. Scientists have found toxic metals such as lead in e-cigarettes.

    6. Vaping every day doubles the risk of a heart attack. Smoking triples the risk.

    7. People who smoked and vaped every day have five times the risk of a heart attack as those who take up neither habit.

    8. E-cigarettes are widely promoted as a way to stop smoking but they might make it harder to quit so most people end up doing both, says a researcher.

    This preliminary information would seem to warrant a similar tax to cigarettes in Virginia, perhaps a higher one since the tax would not penalize Virginia farmers.

    Larry makes an interesting suggestion to earmark the funds to apply towards Medicaid/Medicare expenses for smoking/vaping related diseases.

  7. It appears that the same nonsense is being put forth regarding products such as diet soda. Soda, especially diet versions, has a significantly detrimental effect on health. See how many grocery carts are filled with health care costs just waiting to be incurred.

    Again, studies are sparse due to industry influence, but here is what they currently show:

    1. A 2016 study showed that nearly half of adults and 25% of children consumed artificial sweeteners, mostly in diet drinks.

    2. Regular diet soda intake is linked to strokes and heart attacks, type-2 diabetes and obesity.

    3. A study of 4,400 people age 45 and older found that those who drank one or more diet sodas a day were three times more likely to have a stroke than those who didn’t, according to an American Heart Association journal.

    4. Three other studies found that people who drank diet sodas had a 30-55% higher risk of metabolic syndrome than those who didn’t.

    5. Daily diet soda drinkers had a 45% higher risk of heart attack, stroke and early death; and about a 30% higher risk of hemorrhagic stroke.

    6. Artificial sweeteners trick the brain into craving high-calorie foods, leading to weight gain.

    7. A 2014 study showed that artificial sweeteners altered gut bacteria in a way that increased glucose intolerance that often precedes diabetes.

    8. Artificial sweeteners have been found to trigger painful headaches.

    9. Diet sodas trigger many imbalances and are an absolute disaster for your skin, contributing to premature aging.

    10. Diet soda drinkers are likely to be depressed. A study of 263,925 adults showed that soda drinkers were 30 percent more likely to be depressed – drinking diet soda added another 22% of risk of depression (diet soda drinkers are 52% more likely to be depressed than non-soda drinkers).

    11. Drinking soda, especially diet soda, ruins your bones. Low bone mineral density can contribute to long-term osteoporosis.

    12. Diet soda affects your mood. It tricks your body into thinking you are ingesting a bunch of sugar but you aren’t. Some have suggested that President Trump’s volatile mood swings are increased by his significant intake of diet Coke.

    13. Diet soda mixed with alcohol gets your drunk faster than a sugary cocktail would.

    14. Drinking diet soda makes it harder to concentrate.

    15. Drinking diet soda puts you at a high risk for hypertension.

    16. Drinking diet soda is bad for your kidneys and liver. An ingredient in aspartame is metabolized into methanol (a carcinogenic toxin). Your liver converts this into formaldehyde (the primary ingredient in embalming fluid).

    17. Diet soda is addictive. The more you drink, the more you crave it. Some diet soda drinkers drink up to 11 sodas a day. There is an established biological addictive response to the beverage.

    18. Diet soda dehydrates you. It disrupts your hormone response. Hormones from your kidneys keep your fluids balanced.

    19. A University of Miami study shows that drinking just one diet soda a day boosts your risk of heart attack.

    20. The phosphoric acid in sodas has many deleterious effects, including disrupting the nutrient absorption process in your body. This can speed up the aging process and cause your skin and muscles to whither.

    21. Some studies show that diet soda can cause problems during pregnancy. A study in Denmark showed that just one soda a day was associated with a 38% increased risk of preterm delivery.

    22. One study showed that diet soda drinker’s teeth are as bad as meth and crack addicts.

    23. A Boston University study showed that diet soda drinkers are up to 3 times more likely to develop Alzheimer’s or dementia or suffer from a stroke compared to those who didn’t drink soda.

    I apologize for the long list, but most people are completely ignorant of this information and are easily fooled by an industry saying that diet soda somehow produces “less harm” in order to gain an economic advantage.

    We should should be very wary of such presentations and not take any legislative action based on on the word of a few lobbyists. More evaluation is needed to protect the public interest. We should encourage our businesses to prosper in Virginia, but in ways that increase our well-being.

  8. I don’t know all the facts so far but TomH has some and my suspects are that Vaping is not without consequences.

    But the big thing is that nicotine is HIGHLY addictive just as OPIOIDS are.

    the DIFFERENCE is that Vaping is CHEAP compared to OPIOIDS and I’d ask a simple question. What if OPIODS were just as legal and relatively cheap as Vaping?

    I’m sure there are some good arguments against it. Let’s hear them.

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