Trump Wants $100M in Fees from the Vape Industry


by Jim McDonald

 

The Trump administration’s proposed federal budget for fiscal year 2020 includes user fees on vaping manufacturers. The fees, previously assessed only on tobacco companies, pay for the operations of the FDA Center for Tobacco Products (CTP), including regulatory and enforcement activities, and public education like the $60 million Real Cost campaign.

Tobacco user fees have never before been applied to products that don’t contain actual leaf tobacco. Currently the FDA assesses and collects user fees from manufacturers and importers of cigarettes, snuff, chewing tobacco, cigars, roll-your-own tobacco, and pipe tobacco.

“The new resources will support the FDA in its continued efforts to create a modern regulatory framework for the appropriate oversight of e-cigarettes and in taking continued steps to reduce youth use of all tobacco products,” said FDA Commissioner Scott Gottlieb. “One of our most important public health efforts is to continue standing up a framework to make sure we can put e-cigarettes through an appropriate series of regulatory gates, and aggressively confront youth use of these products to make sure children don’t become addicted to nicotine.”

The 2019 CTP user fee assessments total $712 million. Of that, $616 million comes from cigarette assessments.The 2020 fiscal year for the federal government begins Oct. 1, 2019.

The Trump proposal would increase the user fee cap by $100 million to a total of $812 million in fiscal year 2020, and would index future “tobacco-related product” user fee assessments to inflation. The $100 million is expected to come from the vapor industry.

“This proposal would ensure that FDA has the resources to address today’s alarming rise in youth e-cigarette use as well as new public health threats of tomorrow,” claims the White House. “New tobacco or nicotine products that are regulated by FDA should also pay a user fee, just as other tobacco related products that are subject to FDA’s user fee.”

New Hampshire Democratic Sen. Jeanne Shaheen, who recently introduced a Senate bill to assess user fees on vaping products, was positive about the proposal. Shaheen’s bill calls for assessing fees of $150 million, or two percent of vape sales during the previous (2019) fiscal year. “I hope to work with the administration as I rally bipartisan support for my legislation in Congress,” Shaheen told the Washington Post.

The administration is proposing a total FDA budget of $6.1 billion. Of that, $2.8 billion is from user fees — about $2 billion from drug and medical device companies, and most of the rest from tobacco (and vape) manufacturers. The 2020 FDA budget, if approved by Congress, would include about a seven percent increase in funding over the 2019 budget. The budget including the new user fees must be approved by Congress

No one from the White House has explained how imposing user fees on non-tobacco nicotine products fits with President Trump’s stated mission to reduce regulations and lower taxes. It is also unclear why the administration expects the vaping industry to contribute one-eighth of the CTP’s total budget, when vapes represent a much smaller portion of the entire tobacco products market. How was the $100 million figure arrived at? No one knows.

Currently, tobacco user fees are calculated using a complex formula that includes a multiple of the federal excise tax rate for each type of tobacco product. It isn’t known whether the Trump administration’s proposal means that a federal tax on vapor products will also be imposed, or if a new system will be used to assess user fees for e-cigarettes. Either would require amending the Tobacco Control Act.

User fees are not technically taxes, and are not charged directly to consumers. But as with any cost to manufacturers, the user fees have to be passed onto buyers or taken from profits. Manufacturers and importers will raise the prices vapers pay to offset the user fees. Higher prices mean fewer smokers will switch to vaping.

Reactions from the vaping industry and from conservative activists were swift and negative.

“President Trump should fire whoever duped his office into proposing this $100 million tax increase on adult consumers trying to quit smoking,” said American Vaping Association president Gregory Conley. “This is nothing more than a virtue tax that will cost jobs and lives.

“Most absurdly, the proposal says nothing about how each manufacturer’s share of the fee is to be calculated,” Conley added. “Cigarette and smokeless tobacco user fees are determined by breaking down the share of federal excise taxes paid by each company in those industries. What exactly is the FDA’s grand plan to determine how much an e-liquid manufacturer is required to pay yearly?”

“It’s unfortunate, however, that a proposed tax increase championed by Gottlieb has made its way into the President’s budget,” said Paul Blair of Americans for Tax Reform. “We’re hopeful that Congress rejects this misguided assault on the life-saving potential of e-cigarettes and that the Senate replaces Gottlieb with someone who champions the cause of consumer freedom, innovation, and tobacco harm reduction.”

 

 

 

 

 

Article originally posted here.

 

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Saturday, October 10th, 2020 at 5:02am
@ChaunceyGardner @Dstat_THR @asthma I have COPD from my many years of tobacco abuse. I was wheezing and using inhalers. After quitting tobacco via vape technology, a few months later I was inhaler-free, symptom-free, and my doctor says my lungs sounds perfect. I was also using oxygen occasionally. Saved by the vape
Saturday, September 26th, 2020 at 4:24pm
@GrimmGreen @KatTimpf The last beef I ate was in about 1988.
You can do it too.
It's unnecessary and harmful. :)
Saturday, September 26th, 2020 at 4:16pm
Goodbye and farewell to @MendocinoVapors , they had to close shop due to being deemed 'non-essential'.
https://t.co/Koa3mL7D7z
Thursday, September 24th, 2020 at 9:44am
@ChaunceyGardner I think the period after 'cost' was a typo, they meant to say 'more cost effective'.
Saturday, September 19th, 2020 at 5:07pm
I can't believe it's been a YEAR since #India has banned vaping. #vapingsaveslives and India has a high prevalance of #tobacco use.
I hope the protests go well and make a difference. https://t.co/6jIxGIdgKk
Saturday, August 29th, 2020 at 3:01pm
@ChaunceyGardner @GregTHR They know what they're doing. It's called funding from the #MSA agreement. Began with banning all flavor sales in #Oakland ,CA and then #SanFrancisco banned all vape sales. https://t.co/S0rh4MghVD
Saturday, August 29th, 2020 at 4:07am
Well @MendocinoVapors is leaving Fort Bragg, #California because it was deemed a non-essential business and forced to stop sales in April. Read more about such closures here. https://t.co/Koa3mL7D7z
Thursday, August 27th, 2020 at 12:30pm
Well the #California #vape flavor ban passed and is waiting for #Newsom to sign it. Did you contact your policymakers about this when you could have ? https://t.co/ZuuyY7t2BP
Thursday, August 27th, 2020 at 11:36am
@mikepesko @holyvapes @BradRodu @JAHA_AHA @NIH OK but.... according to that URL, Glantz et al has made approximately $13 million for 2 years of work. My earlier graph shows how he has made about $6 million a year for the past 5 years, basically since he took up 'nicotine studies'.
I say it's inexcusable, this amount of $$$.
Wednesday, August 26th, 2020 at 2:14pm
@holyvapes @mikepesko @BradRodu @JAHA_AHA @NIH Here's what went for this ONE article, yes, it DOES appear these grants were given for this ONE study. https://t.co/p12xY6vkET TheVaporNinja photo
Wednesday, August 26th, 2020 at 2:10pm
@holyvapes @mikepesko @BradRodu @JAHA_AHA @NIH Yes, but look at how much $$$ Glantz has received since he took up his anti-vaping 'studies' and activities... should someone like Glantz be given this much $$$ ? https://t.co/aW8Z9lFjVZ TheVaporNinja photo

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