261530 Fiscal and policy implications of selling roll-your-own tobacco as pipe tobacco

Tuesday, October 30, 2012

Michael A. Tynan , Office on Smoking and Health, Centers for Disease Control and Prevention, Atlanta, GA
Daniel Morris, MS, PhD , Health Promotion and Chronic Disease Prevention, Oregon Public Health Division, Portland, OR
Background. The Federal tobacco excise tax was increased on April 1, 2009. While excise tax rates prior to the increase were the same for roll-your-own (RYO) and pipe tobacco, after the increase the tax on RYO was $21.95 per pound higher than the tax on pipe tobacco. Subsequently, tobacco manufacturers relabeled RYO as pipe tobacco to offer these products to consumers at a lower price and tobacco retailers began to offer RYO cigarette machines to customers. Methods. Data on tobacco tax collections comes from the Department of Treasury. Joinpoint software was used to identify changes in sales trends. Estimates were generated for the amount of RYO sold as pipe tobacco and for Federal and state tax revenue lost through August 2011. Results. Approximately 45 million pounds of RYO tobacco has been sold as pipe tobacco from April 2009 to August 2011, lowering state and Federal revenue by over $1.3 billion. State revenue losses range from $63 million in Florida to $117,000 in Vermont. Eleven states have each lost over $10 million, with revenue losses in those states accounting for 62 percent of all state revenue lost. Conclusions. Selling RYO as pipe tobacco decreases state and Federal revenue, avoids regulations on tobacco products, and reduces the effectiveness of tobacco control price interventions. This presentation will discuss the findings of the study, and implications for state and local tobacco programs. This presentation will also describe attempts by states to attempt to curtail these activities and reactions by tobacco retailers and manufactures.

Learning Areas:
Public health or related laws, regulations, standards, or guidelines
Public health or related public policy

Learning Objectives:
Desribe how tobacco manufacturers were able to market roll-your-own tobacco as pipe tobacco to avoid an increase in the Federal tax, and demonstrate strategies used by states to curtail this tax avoidance strategy.

Keywords: Tobacco Taxation, Tobacco Industry

Presenting author's disclosure statement:

Qualified on the content I am responsible for because: I am a Federal public health analyst for the Centers for Disease and Control's Office on Smoking and Health. I am actively involved in providing technical assistance and guidance to state and local tobacco control programs on tobacco prevention policies and interventions.
Any relevant financial relationships? No

I agree to comply with the American Public Health Association Conflict of Interest and Commercial Support Guidelines, and to disclose to the participants any off-label or experimental uses of a commercial product or service discussed in my presentation.