Minnesota Should Reject 2301 - Americans for Tax Reform

April 19, 2021

Members of the Minnesota Senate
From: Americans for Tax Reform

Dear Senator,

On behalf of Americans for Tax Reform (ATR) and our supporters across Minnesota, I urge you to reject of SF 2301, legislation which will increase the tax rate on life-saving reduced risk tobacco alternatives such as electronic cigarettes. If enacted, this anti-science bill would have a disastrous impact upon not only businesses, but public health throughout the state, and lead to a clear increase in tobacco-related mortality. This proposal also seeks to increase the highly regressive tax on tobacco, disproportionately harming the state’s most vulnerable populations at a time when they can least afford it, while doing nothing to reduce smoking rates.

Even former President Obama remarked when he was in office: “The last thing you want to do is raise taxes in the middle of a recession because that would just suck up, take more demand out of the economy and put businesses in a further hole.” Yet SF 2301 flies in the face of that sage advice from the 44th President. As such, it is imperative that this proposal be rejected.

It is important to note that poor public health policies already implemented by the Minnesota legislature have had disastrous consequences on the citizens of your state. The National Bureau of Economic Research determined that Minnesota’s tax on vaping products, prevented 32,400 additional adult smokers from quitting smoking. This entirely self-inflicted public health disaster caused by the Minnesota Legislature will be further compounded if this bill is enacted.

Data from the National Adult Tobacco Surveys has consistently demonstrated that tobacco tax increases have no statistically significant impact on the prevalence of smoking among those with household incomes of less than $25,000. Seventy-two percent of smokers are from low-income communities, and increasing taxes on people unable to quit as they are struggling with the costs of the COVID-19 pandemic will put unnecessary hardship upon families who are already struggling to make ends meet.

Further, cigarette tax hikes promote black markets for smuggled tobacco products, and consistently result in revenues coming in well below revenue projections. Contrary to popular belief, tobacco smuggling is not a victimless crime consisting of someone purchasing a few extra cartons across state lines. In reality, most tobacco smuggling is run by multi-million-dollar organized crime syndicates. These networks, who also engage in human trafficking & money laundering, have also been used to fund terrorist and the US State Department has explicitly called tobacco smuggling a “threat to national security”.

Minnesota already has significantly higher tax rates than any neighboring state. It is close to seven times the rate in North Dakota. As a result of these high tax rates, more than 35% of all tobacco consumed in the state comes from illicit sources. If this bill passes, it could increase significantly to levels found in other states; some as high as over 50%. As a result, it is highly unlikely that this bill would meet revenue projections. Only three out of the 32 state tobacco tax increases studied met tax revenue estimates. For this reason, economists and tax policy experts view cigarette taxes as unsound policy, and it is highly unlikely that revenue projections will be met.

Rather than repeating the failed policies of the past and further punishing low-income smokers unable to quit, the Minnesota Legislature should embrace new methods that are proven to help reduce smoking rates, and facilitate smokers quitting through reduced risk tobacco alternatives such as e-cigarettes. To tax safer products at such a high rate, thereby driving people to more deadly alternatives, goes against every principle of sound public or health policy. As the price of a product increases, it is likely that its use decreases. The same occurs with taxes on vaping, which have been proven to increase smoking rates as people shift back to deadly combustible cigarettes.

About E-Cigarettes and Vapor Products:

Traditional combustible tobacco remains one of the leading preventable causes of death in Minnesota. The negative health effects of combustible tobacco come from the chemicals produced in the combustion process, not the nicotine. While highly addictive, nicotine is a relatively benign substance like caffeine and nicotine use “does not result in clinically significant short- or long-term harms”.

Nicotine replacement therapies such as nicotine patches and gums have helped smokers quit for decades. In recent years, advancements in technology have created a more effective alternative: vapor products and e-cigarettes. These products deliver nicotine through water vapor, mimicking the habitual nature of smoking while removing the deadly carcinogens that exist in traditional cigarettes.

Benefits of E-Cigarettes and Vapor Products:

Vapor products have been proven to be 95% safer than combustible cigarettes and twice as effective at helping smokers quit than traditional nicotine replacement therapies.
Vaping has been endorsed by over 30 of the world’s leading public health organizations as safer than smoking and an effective way to help smokers quit.
Just last month, a new analysis by Public Health England demonstrated just how effective vaping is in helping people quit smoking, noting that in just one year, over 50,000 British smokers, who would have continued smoking otherwise, quit smoking with vaping.

Studies have repeatedly shown that flavors are critical to helping adult smokers make the switch to vaping. Adults who use flavored vapor products are 43% more likely to quit smoking than an adult who uses un-flavored products, according to a recent study from ten of the world’s top experts in cancer prevention and public health.
A University of Glasgow study showed that e-cigarettes particularly help disadvantaged persons quit smoking. Another new study demonstrated that high-strength electronic nicotine products are particularly helpful for smokers with mental health issues quit smoking, like people with schizophrenia who smoke at rates more than three times the national average. Some 40% of participants had stopped smoking traditional cigarettes by the end of 12 weeks and researchers observed an overall, sustained 50% reduction in smoking or complete smoking abstinence in 92.5% of participants at the end of 12 weeks. SF 2301 will have a tremendously negative impact on public health and would fail to decrease socioeconomic disparities.
Evidence demonstrates that flavors play no role in youth uptake of vaping. Academic studies have found that teenage non-smokers “willingness to try plain versus flavored varieties did not differ” and a mere 5% of vapers aged 14-23 reported it was flavors that drew them to e-cigarettes. National Youth Tobacco Survey results have shown no increase in nicotine dependency among youths since flavored products entered the market.
Vapor products would save more than 125,000 lives if a majority of Minnesota smokers made the switch to vaping, extrapolating from a large-scale analysis performed by leading cancer researchers and coordinated by Georgetown University Medical Centre.

In the interests of public health, preventing a boon in criminal activity, protecting the most vulnerable in society from financial hardship, and decreasing socioeconomic disparities in health, we call upon you to accept the science and reject SF 2301. Small increases in projected revenue should never come at the expense of human lives – and make no mistake, if this is enacted, it will cost lives. Tens of thousands of lives depend on it.

Sincerely,

Tim Andrews

Director of Consumer Issues
Americans for Tax Reform