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Legislative Issues

 Legislative issues have ground to a halt until the beginning of the next legislative cycle. This past legislative year has been a trying one with historic increases in both Federal Excise Taxes on all tobacco products and State tax increases in many states. We anticipate continued State tobacco tax increases as states continue to struggle with budget shortfalls.

 National healthcare legislation is one of the most pressing issues on the near horizon. A national health care mandate threatens to require all businesses generating over $500,000 in revenue to provide health care coverage for their employees. This would put a huge burden on businesses already reeling from increased tobacco taxes and the recent increase in the minimum wage. It is imperative that you call and/or write your federal legislators to let them know what a burden forced health care coverage would mean to your business.

Tobacco Tax Increases Won't Cover Expansion Costs - Increased tobacco taxes have decreased tobacco demand, resulting in lower than projected revenue for CHIP

WASHINGTON: According to a report issued earlier this week by the National Center for Policy Analysis, the federal excise tax hike on tobacco products allocated to fund the reauthorization and expansion of the Children's Health Insurance Program (CHIP) will fall short of providing its promised health benefits and projected government revenue, the Bureau of national Affairs reports.

The report notes that rising tobacco taxes are decreasing the pool of smokers, which will ultimately decrease expected revenue. As such, it concludes that lawmakers will have to look elsewhere to fund the estimated $33 billion annual cost of CHIP expansion, perhaps with other tax increases. And all of this comes while the number of children qualifying for CHIP coverage grows.

CHIP (previously the State Children's Health Insurance Program, or SCHIP) provides health coverage to uninsured children and was reauthorized earlier this year.

The report also notes that the increased tobacco tax has disproportionately affected poor customers and small businesses.

"Government tends to impose excise taxes on goods on which lower-income individuals spend a greater percentage of their consumption dollar", the report said.

Higher tobacco taxes have also affected small retailers that sell tobacco products, as well as domestic cigar producers and distributors, with sales that are sharply down.

 On June 22, President Obama signed into law “The Family Smoking Prevention and Tobacco Control Act of 2009,” which gives the U.S. Food and Drug Administration (FDA) authority to regulate tobacco products.

This legislation itself is very lengthy and contains various timelines and details.  Some specific regulatory provisions of the Act are effective immediately, such as user fees paid by tobacco manufacturers.  Other provisions will be phased in over the next few years.

It is unknown at this time exactly how the FDA will use its full authority to issue additional regulations should it deem those regulations to be in the best interest of public health.  Therefore, we don’t know what the exact future impact will be on tobacco manufacturers, retailers and wholesalers.  We do know, however, that the Act gives the FDA broad authority over the manufacturing, packaging, advertising, marketing and sale of tobacco products. Some examples include:

*   Changes in products and product development;
*   Introduction and communication of less harmful products;
*   Regulation of tar, nicotine and “other harmful components”;
*   Disclosure of ingredient information; and
*   Content of advertising, packaging, and warnings.
Importantly, the Act also includes some limits on FDA authority:

*   It prohibits the FDA from banning all tobacco products; and
*   It prohibits the FDA from requiring that a tobacco product’s nicotine yield be reduced to zero.

Below is a timeline of the current major components of the Act.
 

Effective Dates Under the Family Smoking Prevention and Tobacco Control Act

2009 2010 2011 2012 2013 2014 2015

2009 2010 2011 2012 2013 2014 2015

1Label refers to package in which product is sold to consumer (pack, tin, carton) 2Cigarettes includes roll-your-own tobacco products