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Federal Tax Should Be Increased on All Tobacco Products, Including Cheap, Sweet Cigars

Statement of Matthew L. Myers, President, Campaign for Tobacco-Free Kids
April 09, 2013

WASHINGTON, DC – President Obama's budget to be released Wednesday is expected to include an increase in the federal tax on cigarettes and other tobacco products to pay for early childhood education initiatives. This proposal will both raise revenue and save lives by reducing tobacco use. We applaud the President's decision to include other tobacco products as well as cigarettes. To counter the tobacco industry's latest tactics to addict kids, the federal tax should be increased on all tobacco products, including cheap, sweet cigars. Sales of these cigars have flourished in recent years and are undermining efforts to reduce youth smoking.

While cigarette smoking has been declining in the United States, cigar sales have more than doubled since 2000, driven by an explosion of cheap cigars that come in a wide variety of candy and fruit flavors. National surveys show high school students are twice as likely as adults – 13.1 percent compared to 6.6 percent – to report smoking cigars in the past month, and young adults (ages 18-24) smoke cigars at even higher rates (15.9 percent). Flavored cigars are the most popular among youth, with youth-preferred brands coming in flavors such as peach, strawberry, chocolate, grape, wild apple and watermelon. Many have bright, colorful packaging and are promoted with discount pricing such as '3 for 99¢.'

A recent report by the Campaign for Tobacco-Free Kids – Not Your Grandfather's Cigar: A New Generation of Cheap & Sweet Cigars Threatens a New Generation of Kids – showed how tobacco companies have exploited tax and regulatory loopholes to market cigars that are cheaply priced and sweetly flavored to lure kids.

When a 2009 federal law significantly increased taxes on cigarettes and small cigars, but taxed larger cigars at lower rates, some manufacturers added weight to their products to qualify for the lower tax rate. One company even bulked up its cigars by adding the main ingredient in kitty litter, according to a recent Bloomberg News investigation. Such tax avoidance schemes keep tobacco products cheap and appealing to kids, while costing federal and state governments more than a $1 billion in revenue.

In addition, the Food and Drug Administration (FDA) banned candy- and fruit-flavored cigarettes in 2009 – but tobacco companies continue to market similarly flavored cigars. Some companies have modified their flavored cigarettes to meet the legal definition of cigars (e.g., by adding tobacco to the wrapper) and continued to market them with sweet flavors.

Congress and the FDA should protect our kids by closing these loopholes:

  • In addition to raising the federal tax on cigarettes, Congress should equalize taxes on all tobacco products at the same proposed rate as cigarettes. This will eliminate incentives for tobacco companies to manipulate their products in order to qualify for lower tax rates. Senator Richard Durbin (D-IL) has introduced legislation to close these loopholes.

  • The FDA, which currently regulates cigarettes, smokeless tobacco and roll-your-own tobacco, should extend its jurisdiction to all tobacco products, including cigars, as allowed by law. In addition, Congress should reject pending legislation that would totally exempt some cigars from regulation, which would invite tobacco companies to further manipulate their products to escape public health regulations.
    These actions can help protect our children from the tobacco industry's latest schemes to addict them and reduce tobacco's terrible toll on our nation. Tobacco use remains the leading cause of preventable death in the U.S., killing more than 400,000 Americans and totaling $96 billion in health care costs each year.

View a slideshow of cigar products.