One of the purposes of taxes is to deter harmful behavior. By taxing tobacco, for example, the hope is that it will change behavior and provide revenue for smoking cessation programs. And smoking is expensive: 11,000 Hoosiers die prematurely every year from cigarettes, and another 1,400 perish from secondary exposure.
So why did the Indiana legislature take a counter-intuitive approach in making vaping more tax-friendly, especially for teens?
Senate Bill 382, approved by the Senate on March 1, would reduce the 25% tax charged to wholesalers for closed-system cartridges such as Juul devices to 15%. Thursday afternoon, the bill was in conference committee between the House and the Senate.
What’s troubling here is what also worries us about gun licensing: what’s the reasoning?
The bill’s sponsor, Sen. Travis Holdman, R-Markle, calls the rate cut a “technical correction.” Last year, the legislature approved the higher rate that would begin in July.
Indiana’s smoking rate is among the highest in the nation, and “health and business groups have tried for years to get Indiana’s cigarette tax to increase,” wrote Niki Kelly of The Journal Gazette.
Holdman said the language is the result of year-long negotiations to bring “fiscal parity” between open and closed systems. Open vaping systems are refillable while closed systems are pre-filled and disposable.
Rather than changing behavior by taxing a product that has well-founded fear in organizations such as the American Cancer Society, Indiana is making happy one of the state’s biggest lobbyists – Altria, formerly known as by Phillip Morris.
Altria holds a stake in Juul. He was also the sixth biggest spender in Indiana between 2016 and 2020, promoting his brand to the tune of $1,274,728, according to an Indianapolis Star report.
Two challenges have arisen from this bill: loss of income and long-term health.
The rate reduction on closed-system cartridges will reduce annual revenue collection by about $1.6 million to $2.8 million, beginning in fiscal year 2023, according to the latest analysis from the Legislative Service Agency.
In the long term, we are still grappling with how vaping affects the human body, especially among teenagers. A 2020 survey of Indiana youth showed that 18% of 11th graders and 23% of 12th graders in northeast Indiana reported vaping during the month.
A 2018 Truth Initiative study published in Tobacco Control found that among current youth and young adult Juul users, nearly two-thirds were unaware that the product still contains nicotine. Young people report signs of severe addiction, “such as inability to concentrate in class, using an e-cigarette upon waking up, and using e-cigarettes at night after waking up with a craving,” according to the anti-tobacco organization Truth Initiative.
The negative impact associated with vaping is why we commended Indianapolis Public Schools for joining Community Schools in Fort Wayne and several other Indiana districts, including East Allen and Smith-Green, in a deal tort against Juul. He alleges that Juul preys on teenagers with a physically and psychologically harmful product.
Schools understand. Why not our legislators?