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FOR IMMEDIATE RELEASE |
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State
Rep. Dan Frankel |
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Frankel to conference committee:
Closing $70 million in tobacco loopholes vital for balanced, healthy budget
HARRISBURG, Sept. 16 – State Rep. Dan Frankel, D-Allegheny, today called on the House-Senate conference committee negotiating the state budget to include closing tobacco tax loopholes that could generate $70 million in badly needed revenue.
The tentative budget agreement reportedly includes a 25-cent-per-pack increase in Pennsylvania's cigarette tax projected to generate $97 million. Frankel said the final budget package should also include taxing other tobacco products, including cigars and smokeless tobacco. The change would raise $38 million per year, or at least $70 million per year if the tax is structured as Frankel has proposed.
Frankel's bill (H.B. 57) would close the tobacco loopholes differently than Gov. Ed Rendell, who has proposed a weight-based tax. Frankel's bill would levy a 59.2 percent tax on the wholesale price of smokeless tobacco products -- nearly equal to the percentage at which cigarettes are currently taxed.
"By basing the tax on price, we would automatically keep up with inflation and manufacturers' price increases. This means that when cigarette prices increase, the revenue generated from the tax on other tobacco products would increase as well," Frankel said. "Keeping the tax pegged to price would also help to deter young people from these products the way the cigarette tax helps to do now. Ending the Pennsylvania tobacco subsidy isn't just about balancing the state budget – it's about preventing addiction and saving lives."
"All 49 other states tax smokeless tobacco, and 48 other states tax cigars. Leaving these loopholes in place amounts to a $70 million tobacco subsidy that makes no sense for Pennsylvania – we are not a major tobacco state like North Carolina or Kentucky," Frankel said.
"Closing these loopholes is also vital for public health. If the cigarette tax goes up but special interests get their wish to keep these other products untaxed in Pennsylvania, tobacco users – especially young people – may simply switch to these other products."
According to the Campaign for Tobacco Free Kids, Pennsylvania's rate of 16- to 25-year-olds using non-cigarette tobacco is already twice the national average.
"Smokeless tobacco products not only are health hazards, but also are often the first tobacco products young people sample, serving as a gateway to life-long nicotine addiction. Some non-cigarette tobacco products even come in flavors such as vanilla and cinnamon that seem designed to appeal to kids," Frankel said.
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