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Guam: Cigarette Sales Drop a Third Since $3 Tax; But Smokeless Tobacco Sales Up 137% Source from: Pacific News Center (PNC) (gu) 12/12/2013  The Department of Rev and Tax is reporting that cigarette sales have dropped by one-third since the new $3-dollar tax on a pack of cigarettes took effect in 2010, but smokeless tobacco sales have risen by 137%.
That concerns Vice-Speaker B.J. Cruz who authored the bill raising the cigarette tax. That bill is now P.L. 30-80. Under that law, the tax on smokeless tobacco products is just $1.05, not the $3 dollars imposed on a pack of 20 cigarettes. In a release, the Senator says that the use of chewing tobacco among school-age children has surged. He points out that stores are advertising the sale of 2 cans of chewing tobacco for as little as $8. Senator Cruz says the Rev & Tax report underscores the need for passage of his Bill #206 which would raise the tax on smokeless tobacco to $3-dollars as well. "We have a moral obligation as public leaders to steer our community away from dangerous products," says the Senator in his release adding that his Bill #206 "is an important first step, and I'm confident it will get Adelup's support." Another interesting finding in the Rev and Tax report is that even though the sale of cigarettes has fallen by a third, the annual revenue from the cigarette tax has risen $8.9-million dollars, according to Senator Cruz's release. READ the release from Senator Cruz below: (December 9, 2013 – Hagåtña) Annual tobacco tax revenues have risen $8.9 million and annual cigarette sales have dropped by a third in 2012, but smokeless tobacco sales were up 137 percent since the enactment of Public Law 30-80 that increased excise taxes for cigarettes, cigars and other tobacco products almost four years ago. The Department of Revenue and Taxation collected the newly released figures from the Department of Administration at the request of the Guam Comprehensive Cancer Control Coalition. Vice Speaker Benjamin J.F. Cruz introduced legislation, Bill No. 206-32 (COR), last October to establish tax parity and curb the growing consumption of smokeless tobacco as a cheaper alternative to cigarettes. Under P.L. 30-80, introduced as Bill 150-30 (COR) by Cruz in 2009 and signed by Governor Felix Camacho in February 2010, a pack of 20 cigarettes is taxed $3 while a standard 1.2-ounce container of smokeless tobacco is taxed $1.05. The packaging of smokeless tobacco in smaller units incidentally allows for increased sales of a molecularly identical habitual substance. "I introduced Bill 206 because the use of chewing tobacco among our school-aged children is surging and two cans of chewing tobacco can now be bought for as little as $8," said Cruz, referring to advertising for smokeless tobacco that has been seen posted on storefronts. Cruz's Tobacco Tax Parity Bill would increase the current tax rate on smokeless tobacco from $14 a pound to a new rate of $40, thus resolving the disparity in prorated taxes for the quantities of tobacco products as packaged. The additional revenue will be allocated to the Guam Cancer Trust Fund for the prevention and treatments of cancers and other diseases caused by smoking and tobacco use. The measure has been scheduled for a public hearing to be held before the end of the year by the Committee on Appropriations, Public Debt, Legal Affairs, Retirement, Public Parks, Recreation, Historic Preservation and Land. "We have a moral obligation as public leaders to steer our community away from dangerous products," said Cruz. "[Bill 206] is an important first step, and I'm confident it will get Adelup's support." The tobacco tax revenue data (Table 1), which includes collections for fiscal years 2008 to 2012, shows a broad disparity in the increases of annual tobacco tax collections after the enactment of Public Law 30-80, which increased sin taxes on cigarettes from $3 to $15 per 100 sticks of cigarettes and smokeless tobacco from $3.50 to $14 per pound. According to the DOA data, whereas cigarette tax revenues merely doubled, $15.4 million in FY2012 versus $7.4 in FY2008, smokeless tobacco revenues were up eight-fold, up $1 million from $125,600 during the same period. Table 1. Tobacco tax breakdown for Fiscal Years 2008 to 2012, obtained from DOA by DRT Revenue Agent and Disclosure Officer Lorraine M. Guerrero. Further analysis shows that in an ideal tax collection state in 2008, Guam should have received taxes for the equivalent amount remitted from 7.4 million packs of cigarettes and 35,907 pounds of smokeless tobacco products, among other products. In 2012 with now $15 per 100 sticks and smokeless tobacco at $14 a pound, cigarette sales were down 31 percent, accounting for taxes collected down to 5.1 million packs of cigarettes, but smokeless tobacco revenues went up 134 percent, with sales up to 84,928 pounds that year. "We need to send a clear message: those who chew tobacco must pay a rate proportionate to the healthcare costs they leave to taxpayers, and chewing tobacco should be beyond the reach of our children or the unscrupulous people who would sell it to them," said Cruz. The new legislation is part of Cruz's continued public health campaign to reduce tobacco use and ease the burden of related healthcare costs shouldered by taxpayers. Federal reports have indicated that rate of smoking among adults in Guam has dropped from 31.2 percent in 2001 to 25.8 percent in 2012 (Behavioral Risk Factor Surveillance System), but the consumption of smokeless and other non-cigarette tobacco has increased, even among the youth (Guam Youth Risk Behavior Surveillance System). In 2011, 7.7 percent of BRFSS responders reported daily or regular use of smokeless tobacco products such as chewing tobacco, snuff or snus. While figures for 2013 are still forthcoming, adult smokeless tobacco use in Guam has more than doubled from 2009 to 2010, according to BRFSS data. "Smokeless tobacco is just as dangerous as normal cigarettes so it only makes sense to address chewed tobacco in the manner we address smoked cigarettes," Cruz said. "Bill 206 provides a two-fold opportunity: it addresses a growing concern in our community, and provides a new revenue source for funding public healthcare; it's a win-win." Enditem Related Updates |
