The approach is similar to one that legislators took when pushing through a law that more than doubled the federal cigarette tax – from 39 cents to $1.01 a pack – to help pay for a $32.8 billion expansion of the State Children's Health Insurance Program. President Obama signed that bill into law in February 2009. The additional funding was estimated to provide coverage to an additional 4 million children. The smokeless-tobacco tax issue is pivotal to Reynolds American Inc. in Winston-Salem, which is plowing ahead with its smokeless initiatives as part of what it calls its transformation into becoming a "total tobacco company." For example, the federal excise tax for cigarettes would go from $1.006 a pack to $2.01. The excise tax on smokeless tobacco product also would be raised to the equivalent of $2 a pack, according to Bill Godshall, executive director of SmokeFree Pennsylvania. The bill would: increase the snuff tax rate from $1.51 to $26.79 a pound; increase the chewing tobacco tax rate from 50.33 cents to $10.72 a pound; and tax dissolvables, snus and other portioned smokeless products at 10 cents apiece. Some advocates disagree with targeting a tobacco excise-tax increase for the disabilities act, saying most tobacco taxes have been geared toward recouping the cost to society of health-care expenses related to its use. John Dinan, an associate professor of political science at Wake Forest University, said he doesn't expect the Senate bill, or a House version, to move forward this year. "Tax increases are likely to face a particularly uphill battle," Dinan said. Analysts hope the bill could further stimulate the debate about the role smokeless-tobacco products can play in reducing overall cigarette demand. One set of anti-tobacco advocates say smokeless tobacco is a gateway for teenagers to cigarettes and discourages users from quitting as they find fewer public places where they can legally smoke. The Campaign for Tobacco-Free Kids says "all products must be taxed at equivalent rates" to keep users from switching. Bonnie Herzog, an analyst with Wells Fargo Securities LLC, said in an Aug. 15 report that of the about 1 million adults who quit smoking each year, about 50 percent either begin or continue to use smokeless-tobacco products. Another set of advocates argue that smokeless tobacco, while still not safe for users, is significantly less harmful than smoking, primarily because it does not involve burning tobacco. "There are many of us with public-health backgrounds who believe that all tobacco, nicotine and other alternative products should be taxed based on their risks and relative risks," said Scott Ballin, past chairman of the Coalition on Smoking or Health. "This type of incentive to manufacturers could help move users of the most hazardous form of nicotine delivery — the cigarette — to other tobacco, nicotine and alternative products that are scientifically established to be 90 percent lower in risk than cigarettes." Whatever tax increases Congress approves for tobacco products is likely to be mirrored by states with already high tobacco taxes, said Kathleen Dachille, director of the Center for Tobacco Regulation at the University of Maryland School of Law. "There's the potential that by raising the smokeless-tobacco tax, you could lead smokers to stick with cigarettes rather than potentially less-harmful alternatives because the alternatives are just as costly," Dachille said. "That's one of many reasons why we need more clarity from the FDA on how harmful are smokeless-tobacco products compared with cigarettes so to present a better cost-benefit analysis in terms of public health and in terms of product cost."
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