RockTheCapital.org

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.   

Why?

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.”