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1 Ulrik Boesen, Taxing Nicotine Products: A Primer 1 (2020)

handle is hein.taxfoundation/txnicp0001 and id is 1 raw text is: 

Taxing Nicotine Products: A Primer

Ulrik Boesen
Senior Policy Analyst, Excise Taxes

Key   Findings:

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*  The  American  nicotine market is developing faster than ever due to
   introduction of non-combustible  recreational nicotine products. These new
   products, along with a greater consciousness about the dangers  of smoking,
   have  prompted  millions to give up smoking. This contributed to federal and
   state excise tax collections on tobacco products declining since 2010.

*  Excise taxes are commonly  employed   to discourage certain behaviors.
   They  do this by decreasing both supply and demand  for a product via price
   increases. They are also imposed to price in externalities associated with
   consumption   of specific goods.

*  Current  federal tax proposals seek to tax electronic nicotine delivery systems
   (vapor products) at the same rate as traditional cigarettes. H.R. 4742 was
   approved  by the House  Ways  and Means  Committee   in October 2019  and
   suggests taxing based  on nicotine content.

*  Twenty-one   states currently tax nicotine products, but they do so in different
   ways. States tax based either purely on price (ad valorem), purely on volume
   (specific), or with a bifurcated design at different rates for open and closed
   tank systems. More  states are expected to introduce taxes on vapor products
   in 2020.

*  From  a pure public health standpoint, the justification for taxing recreational
   nicotine products can seem  weak. Vapor  products, heated tobacco, snus,
   and  nicotine pouches are all thought to be considerably less harmful than
   cigarettes, which means  substitution from cigarettes to any of these products
   should  be encouraged. While youth  uptake is a very real concern, tax policy is
   not the appropriate way  to address it.

No. 688
Jan. 2020

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