May 23, 2009 - In Pennsylvania unlike cigarettes ($1.35 per pack), other tobacco products (OTPs - such as pipe and rolling tobacco, chew and cigars) are not taxed. Pennsylvania is currently the only state in the nation with this tax loophole for smokeless tobacco and other tobacco products.
As part of his 2009-10 budget proposal, Governor Ed Rendell has included a tax on non-cigarette tobacco, also known OTPs. Like cigarettes, these products pose serious health risks and can lead to lifelong addictions among our young people. The governor has proposed a tax based on the weight of the products. But the weight-based tax could actually boost profits for some of these products. Governor Rendell can fix this flaw easily. Instead of taxing such tobacco products based on their weight, the state should base the tax on a percentage of the wholesale price.
State Representative Dan Frankel has introduced House Bill 57, which would tax OTPs based on the price for which a tobacco manufacturer sells the product to a distributor or wholesaler.
Some tobacco companies are pushing for a weight-based tax to help wipe out their competition and get kids addicted to a whole new generation of smokeless tobacco products. That's because they are now selling ultralight tobacco products that are smokeless, spitless, and able to dissolve in the mouth like candy. These products would be lightly taxed under Rendell's proposal, keeping their price very low and making them more accessible, especially to youths.
Conservatively, Pennsylvania could generate about $70 million a year from a price-based tax. That would go a long way toward balancing the state budget.
Tobacco is taxed for for two main reasons: First, to discourage people from using it - pushing them to quit or at least cut back. This is particularly true in the case of young people and second, we tax tobacco to make money for the state.
Increasing the prices of tobacco products by 10 percent reduces adult consumption by 3.7 percent, and male youth consumption by 5.9 percent, according to the Campaign for Tobacco-Free Kids. Some may argue that other tobacco products aren't as harmful as cigarettes. That's not true. Smokeless tobacco is as addictive as cigarettes, and users are 80 percent more likely to get oral cancer than nonusers are.
Pennsylvania is particularly hard-hit by these other tobacco products. Seven percent of adult males in Pennsylvania use smokeless tobacco - more than double the national average of 3 percent. And 15 percent of our high school students have experimented with smokeless tobacco, making them prime candidates for more severe nicotine addiction when they are adults.
Pennsylvania does have a smoking ban in place but it's not as strict as the other surrounding states.
Reference: Right tax, wrong measure A proposed levy on smokeless tobacco is a fine idea, but not if it is based on weight. by Joy Blankley Meyer, The Philadephia Inquirer, 5/22/2009; Tax all types of tobacco Let's snuff out the loopholes< by State Rep. Dan Frankel, Pittsburgh Post-Gazette, 5/7/2009.
A few related news briefs: Utah moves from a tax based on the percentage of sales price to one based on the weight - independent of price of smokeless tobacco product..; Wyoming - tobacco tax increase killed/Smokeless tobacco taxed by weight; Maryland - leaning toward taxing moist snuff based on weight NOT price...