by Eric Epstein
Pennsylvania is the only state that does not impose an excise tax on “smokeless” tobacco, cigars or pipe tobacco. We were also one of the last states to join the cigarette tobacco suits. Yet the public health costs, loss of revenue, and decreased worker productivity due to illnesses from these products are well established.
Lip, gum, jaw, mouth, stomach and throat cancer are among the documented afflictions that society pays for as a result of the consumption of “niche” tobacco products.
“Smokeless” tobacco contains at least 28 known cancer-causing chemicals including arsenic, benzene, cadmium (used in car batteries), cyanide, formaldehyde (used for embalming), lead (nerve poison agent), polonium 210 (nuclear waste), and N-Nitrosamines (cancer-causing agent). The University of Pittsburgh found that “smokeless tobacco puts more nicotine into the bloodstream than cigarettes, people who ‘chew’ on a regular basis often find it harder to quit than cigarette smoking.”
Especially disturbing is the rising level of “snuff” use among young males. “For instance, in rural areas, the rate of smokeless tobacco usage was 10% in 2005, compared to 2% percent in large urban areas or 3.7% in smaller urban areas. In addition, high school boys (13.4%) use smokeless tobacco at much higher rates than high school girls (2.3%).” (CDC, “Youth Risk ehavior Surveillance,” 2007).
The CDC suggested that Pennsylvania disperse over $155 million annually on tobacco prevention and cessation programs. We currently spend $31 million on these programs due to funding decreases.
Frankly, it’s inexplicable that our society correctly views obesity as an epidemic among young people, but “smokeless” tobacco addiction is splashed to the side of the baseball diamond.
A year after legislation made cigarette, cigar, and pipe smoking illegal in restaurants, office buildings, schools, sports arenas, theaters, and bus and train stations, big tobacco wanted to make sure it didn’t get burned again. The National Institute on Money in State Politics reported that the tobacco industry donated $415,950 to Pennsylvania candidates and campaign committees in 2008. By contrast, in 2006 the industry only invested $161,455 on Pennsylvania politicians.
Despite the medical facts on the ground and the economic exposure caused by “smokeless” tobacco, cigar products, and pipe smoking, the legislature is content to chew its cud .
This situation is a classic example of external diseconomics when society pays more for a product – in this case adverse health impacts – than the value of output produced. An equitable solution is either for the producer to internalize the costs or charge consumers the full value for the consumption of the products.
In other words, you can’t start a fire, watch it burn, and charge admission while bystanders put the fire out. Not imposing an excise tax on a public health menace is a de facto subsidy. It’s the same logic that allowed coal companies to walk from acid rain, black lung, mine subsidence, and contaminating thousand of miles of Pennsylvania’s waterways.
Although we assess a user fee on everything from gasoline to gambling, “niche” tobacco products are viewed as emerging industries that we daresn’t snuff out. Without a dedicated user fee, somebody other than producer and consumer is picking up the tab for medical bills and reduced worker productivity. That somebody is the rate payer and taxpayer. Pennsylvania spends $5.12 billion dollars annually on health care costs linked to tobacco related diseases.
We need to ensure this “niche” growth engine shoulders a fair share of the burden for the damages it causes. However, any excise tax on this industry in the hands of this legislature and this governor is a risky proposition as evinced by the table games Wam-a-thon. Moreover, revenue streams created by assessing these products must be dedicated to education, cessation, and medical offsets. Suffice to say it will be up the next Governor to strike the proper balance between risk and reward for “just a pinch between your check an gum.”
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