Bill > S1186

Introduced Session

This bill increases the tax rates under the tobacco products wholesale sales and use tax, imposed on tobacco products other than cigarettes, and upon moist snuff, to be parallel with the current cigarette tax rate, and annually dedicates revenues from the rate increases for smoking and tobacco use cessation programs in the Department of Health. In recent years, almost every state and the federal government have increased tobacco taxes. Tobacco tax increases are one of the most effective ways to reduce smoking and other tobacco use, especially among children. Every 10 percent increase in cigarette prices reduces youth smoking by about seven percent and total cigarette consumption by about four percent. At both state and federal levels, and within states, there are substantially different methods and rates of tax imposed upon cigarettes and non-cigarette tobacco products. Different tax burdens are imposed upon users of different tobacco products. No compelling policy reasons exist for these differences. However, higher tax rates upon one tobacco product compared to another have been found to influence comparative product pricing, and consumer behavior, in switching from the use of one higher priced product, often also subject to stiffer distribution regulations, to the use of products lower in price and less regulated. This is especially true for youthful consumers. Most states that have significantly increased cigarette taxes have not suffered substantial decreases in revenue, and have experienced reductions in the rates of smoking and other tobacco use. Higher tobacco taxes also save money by reducing tobacco-related health care costs, including Medicaid expenses. States have realized even greater health benefits and cost savings by allocating some of the tax revenue to programs that discourage adults and children from smoking and using non-cigarette tobacco products and help smokers and tobacco users quit. A recent report by the Campaign for Tobacco-Free Kids has noted the tax differences within each state on cigarettes and other tobacco products such as cigars, chewing and other smoking tobacco, and snuff. The Campaign reports that to deter tobacco use among children, it is important to raise tax rates on all tobacco products to prevent switching to a lower-taxed and lower-priced tobacco product and prevent initiation into these other tobacco products. This report calculates that a parallel rate of tax in New Jersey for non-cigarette tobacco products, compared to the state tax of $2.70 per cigarette pack (or $0.135 per cigarette), equalizing the state tax burden upon wholesale prices, will require a tripling of the tax rate, increasing from 30% to 90% of the wholesale price of non-cigarette products, and a tripling of the rate of tax per net ounce of moist snuff products, from $0.75 per ounce of net weight to $2.25 per ounce of net weight. The amount of tax revenue anticipated to be annually collected from the tax rate increases is to be appropriated annually from a dedicated fund established in the Department of Health to fund smoking and tobacco use cessation programs in the State. State funding for support for tobacco control programs has steadily decreased from $30 million in 2003 to nothing in State funds last year. Under this bill, the State will increase its efforts to deter tobacco use by making the habit more expensive, and by enhancing its smoking and tobacco use cessation programs, in a win/win battle against lung cancer, New Jersey's No. 1 cancer killer, and other tobacco-related cancers.

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Joe Vitale (D)*,  Linda Greenstein (D),  Loretta Weinberg (D), 

Introduced in the Senate, Referred to Senate Health, Human Services and Senior Citizens Committee (on 01/25/2018)