The Hidden Cost of Build Back Better: Nicotine Tax

There have been a lot of talks about the costs and effects of Build Back Better, one that I have seen rarely addressed either in the media or here is the "Nicotine Tax", this is a relatively small section deep into the document:

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf
(See SEC. 138520. IMPOSITION OF TAX ON NICOTINE. P. 1973)

Now its safe to assume that most Americans if they have read this at all, have not made it almost 2k pages in. And, while in earlier drafts this section was going to include tax increases on tobacco products, this was eliminated and instead includes a tax increase on nicotine products (which to be clear, is not any product that contains nicotine, just tobacco free nicotine products, IE nicotine pouches, nicotine lozenges, nicotine gum, and vape stuff). So now, no taxes on tobacco products (harmful), but massive taxes on nicotine products (far less harmful).

Most people would say "fine, they have been under the radar many years, this is a balancing act", well maybe that would be fair if we were talking about minor taxes, we are not. In the most inexpensive States (that have low or no tax on nicotine pouches) this will make a can of nicotine pouches cost 10 USD a can. In more tax heavy states this is expected to make nicotine pouches cost over 20 USD a can. Keep in mind in many areas you can get a can for 1-3 dollars (or .99 if you really look hard for deals). While dip (moist snuff) will not change, meaning you can buy a can of dip for 2-3 USD, but a safer alternative will cost 10-20 USD.

This is going to cause a lot of people to switch from using tobacco free products back to tobacco. Not just dip, its even cheaper to smoke cigarettes over nicotine pouches (or vape).


One of the few places that I can find this being covered honestly after looking is "The Tax Foundation":
https://taxfoundation.org/federal-nicotine-tax-proposal/

The main problem is that this tax is based on nicotine content instead of a unit (IE cost per can or pack, or even weight), so it unfairly effects products that by design have to have large amounts of nicotine in them (even if such nicotine is not absorbed).

"tax on nicotine products, which would tax products by nicotine content at a rate of $50.33 per 1,810 milligrams of nicotine. This rate has been chosen to establish approximate parity between the tax rate on a pack of cigarettes and vapor products. Nicotine products are not uniform, however, and as a result, some nicotine-containing products would experience tax rates well above the rate levied on more harmful tobacco products. "

"In terms of tax base, a tax on nicotine products should be based on quantity. For vapor products, the obvious choice is taxing the liquid by volume (that is, per ml), and for nicotine pouches, a tax by weight or per pouch is a straightforward solution. It is the administratively simplest and most straightforward way for the federal government to tax these goods, as it does not require valuation and as such does not require expensive administration. "

"Nicotine pouches for oral consumption would be subject to a very high rate. A can of 20 pouches, each containing 8 mg of nicotine, would be subject to $4.45 in taxes per can. Because nicotine products—vapor products and nicotine pouches alike—are often taxed at a percentage of value in the states, these high federal rates would compound at the state level, because the federal tax is built into the price by the time it reaches state-level distributors. The accompanying table illustrates this effect for a few example products."

" The effects of the tax are most substantial for nicotine pouches, such that the category is unlikely to survive. (In Minnesota, a can would cost almost $20.)"

https://taxfoundation.org/federal-nicotine-tax-proposal/


This seems like an insane policy that most people probably will not care about because its such a niche market (and tobacco companies probably secretly like as it will cause people to return to using tobacco). But, I know there are many on this board who use nicotine pouches (myself included), so this is important to keep in mind, and they are going to punish people who are using healthier alternatives, and the tax revenue from this will be virtually nothing (10 billion over 10 years projected, if usage rates remain the same and more products do not get banned, neither of which will be the case).

-It should be noted that this does not apply to FDA approved medical nicotine IE approved patches and medical gum etc.... just recreational nicotine-
-It should also be noted that revenue projects were going to be 100 billion (over 10 years) for tobacco taxes, which makes the switch even more bizarre, its one of those odd changes that -

Ironically (this is one of the few news stories I can even find covering it, as much as I distrust The Intercept) it seems the nicotine tax was added in to cover the lost revenue from the eliminated provisions of the gifting tax for wealthy gifts (which would have been about the same level of revenue over 10 years), making this a regressive tax, shifting the burden from the (ultra) wealthy to the not wealthy, it seems that billionaires and tobacco companies both have better advocates in congress that average Americans even amongst Democrats:
https://theintercept.com/2021/11/04/build-back-better-billionaire-tobacco-taxes/

Quote: Gandler

There have been a lot of talks about the costs and effects of Build Back Better, one that I have seen rarely addressed either in the media or here is the "Nicotine Tax", this is a relatively small section deep into the document:

https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf
(See SEC. 138520. IMPOSITION OF TAX ON NICOTINE. P. 1973)

Now its safe to assume that most Americans if they have read this at all, have not made it almost 2k pages in. And, while in earlier drafts this section was going to include tax increases on tobacco products, this was eliminated and instead includes a tax increase on nicotine products (which to be clear, is not any product that contains nicotine, just tobacco free nicotine products, IE nicotine pouches, nicotine lozenges, nicotine gum, and vape stuff). So now, no taxes on tobacco products (harmful), but massive taxes on nicotine products (far less harmful).

Maybe this makes my XXII stock go up.

I do not agree with any taxes that are levied with the intent to influence consumer behavior.

Worse comes to worse, I only slightly prefer pouches over nicotine gum.

I think I am going to quit nicotine all together, though.

Quote: gamerfreak

I do not agree with any taxes that are levied with the intent to influence consumer behavior.

Worse comes to worse, I only slightly prefer pouches over nicotine gum.

I think I am going to quit nicotine all together, though.

I wish I could, but I am very much a nicotine fan. Though if this comes to be I will probably go back to wearing patches. Or maybe just dipping. Because there is no way I would pay 10-20 dollars for a can of pouches when Copenhagen is like 3 dollars.

Quote: Gandler

I wish I could, but I am very much a nicotine fan. Though if this comes to be I will probably go back to wearing patches. Or maybe just dipping. Because there is no way I would pay 10-20 dollars for a can of pouches when Copenhagen is like 3 dollars.

VLN cigarettes should be out soon. Road to quitting.

Quote: AZDuffman

VLN cigarettes should be out soon. Road to quitting.

I don't think they would do anything for me, because I am not really a smoker, its more so the nicotine that I like. So nicotine reduced cigarettes sound unappealing for multiple reasons.

Quote: Gandler

I don't think they would do anything for me, because I am not really a smoker, its more so the nicotine that I like. So nicotine reduced cigarettes sound unappealing for multiple reasons.

Want to quit? It's easy, just quit buying anything to do with nicotine. Don't have it in your house, don't have it in your car don't have it anywhere you can get your hands on it without a great deal of effort. The first couple days might be unpleasant but the reward is worth it. I quit 40 years ago and I've never gone back. It felt like I was let out of prison because I had no idea how much energy I gave to the tobacco habit. And when I quit all that disappeared. For me it was cigarettes. They were constantly on my mind. Did I remember to bring them with me. Do I have enough. Do I have my lighter. Can I smoke here. Am I running low at home. All that went away immediately when I quit. Poof, it was gone. And why did I quit? It wasn't for health reasons, it was because almost overnight cigarettes went from $5 a carton to $7 a carton and I said screw that. For years and years they were $3 a carton. I can't even imagine in my wildest dreams paying what they pay now for a carton of cigarettes. $50 - $60, are they insane? When I had the bar I had a cigarette machine and they were $0.75 a pack. Which was an outrageously high price because I was paying $0.40 a pack to fill the machine up. And they emptied it all the time. I could have supported myself on the money that the cigarette machine and the Jukebox and the pool table and the Pac-Man machines made. Owning a bar is like having a machine that prints money. Too bad the price you pay is alcoholism. Which I was on the road to and the reason I got out.

Although I didn't quit over price, it makes for an additional good reason to quit.

Quote: Evenbob

Want to quit? It's easy, just quit buying anything to do with nicotine. Don't have it in your house, don't have it in your car don't have it anywhere you can get your hands on it without a great deal of effort. The first couple days might be unpleasant but the reward is worth it. I quit 40 years ago and I've never gone back. It felt like I was let out of prison because I had no idea how much energy I gave to the tobacco habit. And when I quit all that disappeared. For me it was cigarettes. They were constantly on my mind. Did I remember to bring them with me. Do I have enough. Do I have my lighter. Can I smoke here. Am I running low at home. All that went away immediately when I quit. Poof, it was gone. And why did I quit? It wasn't for health reasons, it was because almost overnight cigarettes went from $5 a carton to $7 a carton and I said screw that. For years and years they were $3 a carton. I can't even imagine in my wildest dreams paying what they pay now for a carton of cigarettes. $50 - $60, are they insane? When I had the bar I had a cigarette machine and they were $0.75 a pack. Which was an outrageously high price because I was paying $0.40 a pack to fill the machine up. And they emptied it all the time. I could have supported myself on the money that the cigarette machine and the Jukebox and the pool table and the Pac-Man machines made. Owning a bar is like having a machine that prints money. Too bad the price you pay is alcoholism. Which I was on the road to and the reason I got out.

My problem is that I really do not want to quit. I like nicotine. And, I like that there are now safe forms of nicotine, which is what causes me to be upset when they are essentially eliminating the market on safe nicotine products while keeping tobacco.

In any case if I am forced into a corner of quitting or using tobacco, I would consider quitting. But, yeah smoking is very unappealing for me. I just don't understand the reasoning behind effectively pricing safe alternatives out of the market.

Quote: Gandler

And, I like that there are now safe forms of nicotine,

No such thing.

..'Nicotine is an addictive chemical compound found in tobacco plants. Nicotine use can cause serious health problems including increased blood pressure and hardening of arterial walls, causing heart attacks. Nicotine affects your brain and can make it harder to concentrate. Some of the brain changes are permanent and can affect your mood and ability to control your impulses."