Annette K. McClave Health Scientist, Epidemiology Branch Michael A. Tynan Public Health Analyst, Policy Unit CDC, Office

1. Smokeless Tax Policies Differences in Taxes on Cigarettes and Smokeless Tobacco Annette K. McClave Health Scientist, Epidemiology Branch Michael A. Tynan Public Health Analyst, Policy Unit CDC, Office on Smoking and Health 5th National Summit on Smokeless & Spit Tobacco September 21, 2009

2. Health Consequences of Smokeless Tobacco Use • Smokeless tobacco use can lead to nicotine addiction and other serious health consequences • Oral, pancreatic cancer • Possible acute cardiovascular effects (e.g. Heart Rate, Blood Pressure) • Adverse Pregnancy Outcomes • Periodontal Disease • May lead to cigarette smoking, delay quitting • Adolescents who use smokeless tobacco are more likely to become cigarette smokers

3. Smokeless Tobacco Use in the U.S. • More than 8.1 million Americans aged 12 or older (3.2%) are current smokeless tobacco users • Smokeless use has not declined since 2002 Past month use of smokeless tobacco among persons age 12 and older in the U.S. – 2002 to 2007 Source: SAMHSA, National Survey on Drug Use and Health (2002-2007)

4. Excise Taxes as a Policy Tool • Excise tax increases are a policy intervention recommended to reduce tobacco consumption by raising the price of tobacco products • Surgeon General • Institute of Medicine • Community Guide • World Health Organization

5. Review from 2000 SGR • Economic studies tend to focus on the impact of cigarette taxes on consumption • 10% increase in price reduces use by 4% • Very little research exists on the impact tax increases may have on smokeless tobacco use • However, the existing research (though limited) shows higher smokeless tobacco prices are associated with lower smokeless tobacco use Source: Reducing Tobacco Use: A Report of The Surgeon General (2000)

6. Tax Imbalance • Historically, cigarette taxes have increased at a greater rate than smokeless taxes • Price of cigarettes rise more rapidly than smokeless • This imbalance may also impact smokeless • Previous results show an imbalance in cigarette and smokeless tax increases potentially results in higher smokeless tobacco use • If cigarette taxes continue to increase disproportionately, the gap between cigarette and smokeless prices will potentially increase Source: Reducing Tobacco Use: A Report of The Surgeon General (2000)

7. Indentifying Tax Imbalances • We reviewed state excise tax data available from Center for Disease Control and Prevention (CDC) and National Cancer Institute (NCI) legislative databases • CDC’s State Tobacco Activities Tracking and Evaluation (STATE) System • NCI’s State Cancer Legislative Database (SCLD) Program • Through Library of Congress research, we reviewed recent legislation to update the history of Federal excise tax increases contained in 2000 Surgeon General’s Report

8. History of Federal Excise Tax Imbalance Cigarette Excise Tax Enactment 1867 1866 1898 1910 1919 1942 1983 1993 2002 1883 1865 1864 1868 1875 1897 1901 1917 1940 1951 1991 2000 2009 Sources: Reducing Tobacco Use: A Report of The Surgeon General (2000); Children’s Health Insurance Program Reauthorization Act of 2009.

9. History of Federal Excise Tax Imbalance Cigarette Excise Tax Enactment 1867 1866 1898 1910 1919 1942 1983 1993 2002 1883 1865 1864 1868 1875 1897 1901 1917 1940 1951 1991 2000 2009 1991 2000 2009 1986 1993 2002 Smokeless Excise Tax Enactment Sources: Reducing Tobacco Use: A Report of The Surgeon General (2000); Children’s Health Insurance Program Reauthorization Act of 2009.

10. Recent Federal Tax Increases • Federal tax increased on April 1, 2009 • Most products increased by the same percentage as cigarettes, except for roll your own tobacco Source: Children’s Health Insurance Program Reauthorization Act of 2009.

11. History of State Excise Tax Enactments State Cigarette Taxes State Smokeless Taxes • By 1949, 43 states had established a cigarette tax • By 1969 every state had a cigarette tax • By 1949, only 12 states had a smokeless tax • Half of smokeless taxes were established after 1980 • 7 states established a tax in last 10 years • No smokeless tax in Pennsylvania • Took an average of 31 years after a state established a cigarette tax to establish a smokeless tax Sources: National Cancer Institute’s State Cancer Legislative Database Program; Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.

12. State Excise Tax Increases 1995-2008 State Cigarette Taxes State Smokeless Taxes • Between 1995 and 2008 there were 107 separate state cigarette excise tax increases • Between 1995 and 2008 there were only 24 state smokeless excise tax increases Source: Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.

13. State Tax Increases in 2009 State Cigarette Taxes State Smokeless Taxes • 10 of these states have also increased the tax on smokeless products • 4 other states have increased the smokeless tax without increasing the cigarette tax • So far this year, 12 states have enacted tax increases on cigarettes • A promising start?

14. 2009 State Tobacco Excise Tax Increases WA VT MT ME ND OR MN NH ID WI MA NY SD WY MI RI PA IA CT NV NE NJ OH IL IN UT DE CA WV CO VA MD KY KS MO D.C. NC TN AZ OK SC NM AR Both Cigarette and Smokeless Tax Increased (n=10) GA MS AL Cigarette Tax Increased (n=2) LA TX AK Smokeless Tax Increased (n=4) FL HI No Change in Tobacco Taxes (n=35) Note: DC is included among results for states.

15. Issues with Smokeless Excise Taxes • There is no uniform method to tax smokeless products • Federal smokeless tax is based on weight • States smokeless taxes are based on: • percentage of price (most common for smokeless) • sales price/purchase price • wholesale price • manufacturer sales, list or invoice price • by weight (most common for snuff) • percentage of product value or gross receipt of sales • Various methods in taxation complicate evaluation Source: Centers for Disease Control and Prevention’s State Tobacco Activities Tracking and Evaluation System.

16. Other Policy Gaps: Graphic Warning Labels • By June 2010 new text warnings will be required for smokeless • comprise 30% of package • By September 2012, new graphic warnings required for cigarettes • comprise the top 50% of the front and back of a pack • Graphics allowed, but not required for smokeless Source: Family Smoking Prevention and Tobacco Control Act of 2009 Image: Health Canada

17. Smokeless Tax Policies Differences in Taxes on Cigarettes and Smokeless Tobacco Annette K. McClave AMcClave@cdc.gov Health Scientist, Epidemiology Branch Michael A. Tynan MTynan@cdc.gov Public Health Analyst, Policy Unit CDC, Office on Smoking and Health The findings and conclusions in this presentation are those of the author and do not necessarily represent the official position of the Centers for Disease Control and Prevention.