In his 2020 “Budget for a Better America,” President Donald Trump is calling upon Congress to impose a new $100 million “user fee” on manufacturers of electronic cigarettes and vapor products. The proposal would raise the current Food and Drug Administration user fee cap of $712 million by $100 million and be indexed to inflation. Pushed in the name of “tackling the ‘epidemic of youth e-cigarette use,” this tax would further enable the FDA’s anti-vaping spending spree and it flies in the face of public health, consumer choice, and the rest of the president’s tax and regulatory agenda.
Americans for Tax Reform calls upon Congress to reject any and all efforts to impose new taxes on life-saving alternatives to cigarettes in the United States, including e-cigarettes.
This announcement comes just one week after FDA Commissioner Scott Gottlieb announced his retirement from the agency, effective next month. Commissioner Gottlieb has been critical of the e-cigarette industry, threatening to force manufacturers to remove flavored e-cigarettes from convenience stores and other large retail chains. In response to the budget announcement, Gottlieb applauded the new tax, claiming that it would help the agency take “aggressive steps to reduce [e-cigarettes] appeal and access to kids.”
People under the age of 18 are already prohibited by law from purchasing e-cigarettes. Raising the cost of producing and selling e-cigarettes will make the products less appealing to adults who smoke cigarettes, striking a blow to decades of efforts to improve public health by reducing cigarette use in the United States.
The tobacco product user fee is currently calculated based on the amount of excise taxes that a manufacturer has paid. The FDA uses these resources to regulate the industry. In order to collect new user fees from a company, Congress would also have to pass a new national tax on e-cigarette companies. The proposal to impose $100 million in new user fees, indexed to inflation, would only be applied after Congress authorized a new excise tax on e-cigarettes, unless Title 21 of the Code of Federal Regulations was revised.
This request would grease the skids for a national vapor tax and should be rejected without further consideration.
ATR’s Director of Strategic Initiatives Paul Blair issued the following statement in response to a call for $100 million in user fees on e-cigarette manufacturers:
“FDA Commissioner Scott Gottlieb’s departure can’t come soon enough. His constant threats to remove e-cigarettes from convenience store shelves flies in the face of the President’s broader regulatory objectives and will ultimately harm public health.
It’s unfortunate, however, that a proposed tax increase championed by Gottlieb has made its way into the President’s budget. We’re hopeful that Congress rejects this misguided assault on the life-saving potential of e-cigarettes and that the Senate replaces Gottlieb with someone who champions the cause of consumer freedom, innovation, and tobacco harm reduction.”