The Honorable Frank Smith
Montana State Capitol
Helena, MT 59601
Dear Senator Smith,
On behalf of the supporters of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our firm opposition to Senate Bill (SB) 96. This misguided legislation would dramatically raise taxes on products that help tobacco users transition to less harmful vapor products. If enacted in its current form, SB 96 would lead to reduced health outcomes, and a higher tax burden for Montana consumers.
This flawed legislation attempts to lump vapor products with other tobacco products, despite a clear distinction between the two. Vapor products contain no tobacco; they contain nicotine without the harmful chemicals found in traditional tobacco products. SB 96 would amend the definition of an “Other Tobacco Product” (OTP) to include vapor products, inappropriately subjecting them to the same state regulations and taxation as non-cigarette tobacco products, levied at 50 percent of the wholesale price. This is an ill-advised approach to address public health concerns for tobacco users.
This legislation is proposed at a time of mounting academic evidence that vaping products are considerably healthier than traditional combustible cigarettes. Some estimates indicate vapor products are 95 percent less harmful. Because these products are considered safer, vapor products have emerged as an innovative and effective bridge for smokers transitioning towards a significantly less harmful alternative. Policymakers should oppose policies such as this which ultimately raise barriers to healthier choices and also derail efforts to lower health care costs and reduce government spending.
The clear motive for this legislation is not to increase public health outcomes, but to boost state coffers. Since voters rightfully rejected the large tobacco tax increase featured in I-185 last November, some lawmakers are looking to juice the state budget to finance new spending. However, lawmakers should be aware that taxes on tobacco and tobacco-related products usually yield vastly lower revenue than is initially projected. A 2013 study by NTU’s research arm, National Taxpayers Union Foundation, found that revenue projections were met in only 29 of 101 cases where tobacco-related taxes were raised between 2001 and 2011.
Due to the many problems with SB 96, NTU strongly believes passing this proposal would harm Montana more than it would help it. Accordingly, we encourage you to keep these concerns in mind as you hopefully work toward a more fiscally responsible future for Montana taxpayers and consumers.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate