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ARKANSAS

Alabama: News
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TOBACCO HARM REDUCTION 101: ARKANSAS

January 22, 2020

Key Points: 

  • Arkansas’s vaping industry provided more than $157 million in economic activity in 2018 while generating 553 direct vaping-related jobs. Sales of disposables and prefilled cartridges in Arkansas exceeded $5 million in 2016.

  • 2. As of January 16, 2020, ADH has reported eight confirmed and 14 probable cases of vaping-related lung illnesses. ADH does not provide information on age, gender, and substances vaped. ADH earns an F for its lack of transparency on vaping-related lung illnesses.  

  • In 2017, only 1.6 percent of Arkansas high school students reported daily e-cigarette use. More data is needed.   

  • Only 2 percent of FDA retail compliance checks in Arkansas resulted in sales of e-cigarettes to minors from January 1, 2018 to September 30, 2019.

  • Arkansas spends very little on tobacco prevention. In 2019, Arkansas dedicated only $12 million on tobacco control, or 4 percent of what the state received in tobacco settlement payments and taxes.

March 22, 2019

ARKANSAS SHOULD NOT RELY ON CIGARETTE AND VAPING TAXES FOR INCOME TAX RELIEF

Image by Quinten de Graaf

  • “To provide funding for income tax reductions,” Arkansas lawmakers introduced legislation that would increase the state’s cigarette tax and apply a tax on e-cigarettes and vaping devices.

  • Senate Bill 571 would add a “special excise tax of twenty percent” on the sale of cigarettes and a privilege tax, or a tax for the “privilege” of doing business in the state, on e-cigarette products, amounting to a 67 percent wholesale tax on all e-liquids, even those without nicotine.   

  • Cigarette taxes are highly regressive and disproportionately impact lower-income persons.

    • A Cato Journal article found that from “2010 to 2011, smokers earning less than $30,000 per year spent 14.2 percent of their household income cigarettes.”

    • Smokers that earned between $30,000 and $59,999 spent 4.3 percent, and those earning more than $60,000 spent 2 percent of their income on cigarettes.

  • Tobacco and sin taxes are unreliable revenue sources over the long term. The National Taxpayers Union Foundation found from 2001 to 2011, “revenue projections were met in only 29 of 101 cases where cigarette/tobacco taxes were increased.”

  • Policymakers should abstain from taxing vapor products because they are significantly less harmful than combustible tobacco cigarettes

  • Numerous public health groups recognize the reduced harm of e-cigarettes. In 2016, the Royal College of Physicians found e-cigarette use is “unlikely to exceed 5% of the harm caused by smoking tobacco.”

  • The use of vapor products could reduce state health care costs. 

    • Medicaid recipients smoke at rates that are twice the average of privately insured persons, according to the Centers for Disease Control and Prevention. In 2013, “smoking-related diseases cost Medicaid programs an average of $833 million per state.”

    • One study analyzing all Medicaid recipients switching from combustible cigarettes to e-cigarettes estimates savings would have amounted to $48 billion in 2012.

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ARKANSAS E-CIGARETTE TAX IS DISSERVICE TO TOBACCO HARM REDUCTION

February 20, 2019

  • Arkansas legislators are considering two bills that would implement a new tax on electronic cigarettes and increase the tax on combustible cigarettes.

  • Arkansas' current tobacco taxes apply to, “smoking tobacco, moist snuff, cigarettes and other tobacco [and] are taxed” at 68 percent the manufacturer price.

  • SB 347 would impose the same 68 percent tax on vaping devices to include “a vapor product or an e-liquid product.”

    • The first $10 million in revenue generated by the tax will go to the University of Arkansas for Medical Science National Cancer Institute Designation Trust Fund.

    • All other funds generated will be deposited in the Medical Sciences’ cash account.

  • HB 1442 would increase “the cost of doing business” by tobacco retailers from 7.5 percent to 9.5 percent “of the basic costs of cigarettes to the retailer.”

    • The legislation will also impose a 10 cent-per-milliliter tax on e-liquids, which “may or may not contain nicotine.”

    • The legislation does recognize “modified risk tobacco products,” or tobacco products that have been permitted by the U.S. Food and Drug Administration to be advertised with a reduced harm disclaimer and would reduce the rate of taxation, should any products be approved.

  • Arkansas uses very little tobacco revenue towards cessation and prevention efforts

    • In 2018, Arkansas collected an estimated $282 million from tobacco settlements and taxes and only spent $8.9 million, or three percent of the tobacco funding received on tobacco prevention and education.

  • Numerous public health organizations have recognized the reduced harm of e-cigarettes and vaping devices.

  • There are problematic economic implications with the legislation because of the negative effects of taxing vaping products.

  • Vape shops are also a good way for entrepreneurs to create jobs and increase economic opportunities.

  • Arkansas is already losing revenue as the state bans internet sales of nicotine products. Online sales of e-cigarettes grew 41.3 percent from 2016 to 2017, from $345 million to $487.7 million

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