Tobacco Tax Equity Act of 2021: Closing Loopholes and Reducing Youth Tobacco Use

Strategic Insights -

A bipartisan effort to reduce youth tobacco use and close loopholes in the tax code that have long been exploited by the tobacco industry has been introduced in the U.S. Senate. The Tobacco Tax Equity Act of 2021 aims to increase the federal tax rate on cigarettes, peg it to inflation, and set a federal tax rate for all other tobacco products. The bill also sets the first federal e-cigarette tax and closes numerous tax and regulatory loopholes that the tobacco industry has exploited. According to public health experts, increasing the price of tobacco products is the single most effective way to reduce tobacco use, especially among youth.

Key Takeaways:

  • The Tobacco Tax Equity Act of 2021 is a bipartisan bill introduced by U.S. Senate Majority Whip Dick Durbin (D-IL), Senate Finance Committee Chair Ron Wyden (D-OR), and U.S. Representative Raja Krishnamoorthi (IL-D-08).
  • The bill aims to close loopholes in the tax code that have long been exploited by the tobacco industry, including setting a federal tax on e-cigarettes and increasing the federal tax rate on cigarettes.
  • The bill would also peg the federal tax rate on cigarettes to inflation to ensure it remains an effective public health tool and set the federal tax rate for all other tobacco products at the same level.
  • The legislation closes numerous tax and regulatory loopholes that the tobacco industry has exploited, resulting in nearly $4 billion in lost federal revenue between 2009 and 2014.
  • Tobacco is the leading cause of preventable and premature death, annually accounting for 480,000 deaths in America, or one out of every five deaths.
  • Tobacco use costs more than $300 billion a year, including $170 billion in direct medical care for adults and $156 billion in lost productivity.
  • Since 2016, America has seen a 64 percent increase in the number of middle- and high-school children using e-cigarettes, with four million teens currently vaping.
  • The bill is endorsed by several public health organizations, including the Campaign for Tobacco-Free Kids, American Academy of Pediatrics, American Lung Association, and American Cancer Society.

Statistics:

  • 480,000 deaths in America annually due to tobacco-related diseases, or one out of every five deaths.
  • $300 billion a year spent on tobacco-related costs, including $170 billion in direct medical care and $156 billion in lost productivity.
  • 4.5 million youth in America using tobacco products.
  • 64% increase in middle- and high-school children using e-cigarettes since 2016.
  • Four million teens currently vaping in the United States.
  • $4 billion in lost federal revenue between 2009 and 2014 due to tax and regulatory loopholes exploited by the tobacco industry.

Sources:

  • Office of the Senator Dick Durbin
  • The Tobacco Tax Equity Act of 2021
  • Campaign for Tobacco-Free Kids
  • American Academy of Pediatrics
  • American Lung Association
  • American Heart Association
  • American Cancer Society Cancer Action Network
  • American Public Health Association
  • National Association of County and City Health Officials
  • Trust for America's Health
  • American Thoracic Society