Tax Loophole Fueling Rise In Teen Tobacco Use

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(credit: Thinkstock)

(credit: Thinkstock)

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CBS Miami – Two forces drive the spending of teenagers: cost and coolness. Both are behind the latest teenage trend: switching from cigarettes to lower priced, cigarette-style cigars.

CBS4 news partner The Miami Herald reports that public health experts fear the trend is fueled by a federal tax loophole, one that allows small cigarette-style cigars to sell for less than regular smokes. The result: it’s getting the next generation hooked on tobacco.

A report from the Centers for Disease Control and Prevention, released this month, showed dramatic increases in the use of cigarette-like cigars and pipe tobacco. Cigar consumption grew by 233 percent between 2000 and 2011, and pipe tobacco went up 482 percent in the same time period, even as cigarette use declined 33 percent.

The reason isn’t more pipe smokers or the popularity of cigar bars. It’s due to little cigars dodging a 2009 federal excise tax hike on tobacco products, which allowed them to be priced much lower. Manufacturers also repackaged roll-your-own tobacco as pipe tobacco and gained the same exemption.

CDC researchers said most of the pipe tobacco and cigar use gains came within the past three years, immediately following the tax hike and higher cigarette prices. Sales doubled during that time, with 5.7 billion sold in 2011.

The smoking habits of South Florida teens after the hike echo what’s seen in the CDC report. The 2010 Florida Youth Tobacco Survey showed Broward County middle and high school students, and Palm Beach County middle school students, were more likely to have smoked cigars within the past 30 days than cigarettes.

Cheap little cigars encourage young smokers to switch products rather than quit, said Terry Pechacek, associate director for science at the CDC’s Office on Smoking and Health, who co-authored the report.

“These small cigars look like a cigarette, smoke like a cigarette and can be flavored, which make them very attractive to youth and young adults,” he said. “And because they are taxed much lower, these cigarette-like cigars can be priced at $1.20 a pack.”

At a typical South Florida convenience store this week, most brands of cigarettes were selling for $5 to $6 a pack. But Santa Fe little cigars, which come 20 to a pack like cigarettes and are almost the same size, were $1.99. The package carries a small warning label: “Cigars are not a safe alternative to cigarettes.”

Little cigars can be purchased anywhere cigarettes can, said Jessica Piper, 20, of Wellington, “and a lot of kids smoke them when they don’t want to spend more.” A smoker since high school, Piper sometimes does the same when she’s having a cash-strapped week: “They taste all right.”

Some teens and young adults also mistakenly think the small cigars are safer, “that they have less additives and they’ll avoid cancer,” said Piper, who hosts several call-in shows for teens on the Internet radio station, w4cy.com. “But when anyone asks me, I tell them, don’t start smoking. It’s a horrible habit and it’s expensive.”

TheU.S. Food and Drug Administrationdoesn’t regulate small cigars, although legislators granted the agency the authority to do so several years ago, so they don’t follow the stricter labeling and display rules required for cigarettes. Little cigars also can be flavored, forbidden for most cigarettes under FDA rules.

Pat Patel, owner of Macabi Cigars in downtown Fort Lauderdale, said most of his customers are seasoned smokers looking for premium cigars, which start at around $5 each. But young club-hoppers on Las Olas Boulevard do pop in for the less-expensive little cigars he carries, flavored with honey, rum and vanilla. “The girls especially like them,” he said.

Another CDC report last week found that while fewer teens are smoking now than a decade ago, the decline has considerably slowed since 2009. About 30 percent of high school boys and 18 percent of girls used some form of tobacco in 2011, and young adults ages 18 to 25 have the highest rates of consumption among all age groups.

The CDC and other public health groups say federal legislators must close the tax loopholes for cigarette-styled cigars along with pipe tobacco. They also urge the FDA to assert its jurisdiction over these products, particularly in regards to flavoring.

The tobacco industry favors products attractive to teens as it looks to build a new customer base, said Danny McGoldrick, vice president of research for the Campaign for Tobacco Free Kids. “They want to keep their products sweet and cheap,” he said.

Swisher International, the Jacksonville-based manufacturer of several small cigar brands including Santa Fe, could not be reached for comment despite several attempts.

The Altria Group — which owns tobacco stalwart Philip Morris and the John Middleton Co., makers of the popular Black & Mild mini cigars — supports legislation that would require little cigars and roll-your-own tobacco to be taxed at the same rate as cigarettes, said spokesman Ken Garcia.

(©2012 CBS Local Media, a division of CBS Radio Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. CBS4 news partner The Miami Herald contributed material for this report.)

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