Peter Krueger is the State Executive/Director of the Nevada Petroleum Marketers & Convenience Store Association (NPM&CSA)
The past year has been difficult for everyone, but small businesses were especially hurt. Sorely missing the steady flow of customers during lockdowns the industry had come to rely upon, our businesses were left to fend for themselves. Unfortunately, Congress is now considering increasing tobacco taxes to help pay for the upcoming $3.5 trillion reconciliation bill, which would only further harm our small businesses, their employees, and our state.
The proposal first appeared in a piece of legislation introduced last spring called the Tobacco Tax Equity Act. The bill comes with two main prongs, the first being an increase to the federal excise tax rate on tobacco products for the first time in a decade. This has become an increasingly common policy proposal by politicians seeking to gain easy publicity wins. The truth of the matter, however, is that they simply don’t work to even promote smoking cessation. Instead, it will serve as a punitive instrument against innocent, small business owners.
Tobacco products serve a vital role in convenience store sales and increasing taxes on these highly profitable products significantly hampers their ability to generate sufficient revenue.
I serve as the State Executive/Director of the Nevada Petroleum Marketers & Convenience Store Association, and in my time, I have come to see just how valuable tobacco products are to this industry. Without these legal products, I cannot envision a scenario where we don’t see businesses closing shop and lines growing outside our unemployment offices.
We consistently see these results when states increase their excise taxes on tobacco. In Ohio, their excise tax increase cost state retailers and wholesalers $209 million dollars. Meanwhile, Minnesota’s excise tax cost businesses $38 million, which caused an estimated 1,100 jobs. Similar economic hardships have resulted when new tobacco taxes and restrictions have been passed in Nevada.
Making matters worse, because lower-income people are more likely to smoke, they would be the ones paying the most for this tax increase. So not only would this measure take away job opportunities, it would take money from those who can least afford it – directly violating President Biden’s pledge not to raise taxes on people making under $400,000 a year.
There is simply no excuse for Congress to create policies that drastically burdens our small
businesses and creates little improvement for smoking cessation. Following the global pandemic, Nevada needs legislation that aids and relieves our small business community rather than create additional barriers for them.
The second prong to this federal legislation is to create the first nationwide tax on vaping products that will match the rate for tobacco products. The problem with this approach is that it won’t help anyone quit smoking and could have the opposite effect.
Many smokers use vaping products as a bridge to tobacco cessation, meaning they switch from cigarettes to vapes before ultimately quitting entirely. Taxing these products would negatively affect the way consumers view that bridge, and take away the financial incentive for them to quit smoking.
The Tobacco Tax Equity Act is ultimately a counterproductive policy that would significantly harm our small businesses in the process, and if it’s included as a pay-for in the reconciliation package this fall, it will wreak havoc across our communities.
America needs our key leaders to understand the pain that our businesses have suffered over the past year and for them to begin crafting policy that works to restore our businesses. With passage of this policy, I fear that many small shops simply wouldn’t be able to survive.