Without a quorum of legislators present, the Joint Subcommittee to Evaluate Tax Preferences endorsed a legislative proposal for the 2019 General Assembly session surrounding alterations to how the Commonwealth defines and then taxes tobacco products, including new technological advances in tobacco intake to promote better health. The 14-member bipartisan, bicameral panel is also preparing to ask the statehouse to form a “working group” to study new products in the tobacco industry as more adolescents buy items that use liquid tobacco or liquid nicotine for “vaping,” raising concerns about companies marketing towards youths.
According to the Richmond Times-Dispatch, the Henrico County-based conglomerate Altria Group quietly pushed language in the state budget in the previous session to investigate using a process of “atomization” that would heat tobacco but not burn it or release carcinogenic byproducts.
Phillip Morris International, a subsidiary of Altria, is looking to sell their IQOS “smokeless tobacco heating system” in the U.S. For those wondering, as stated by the company itself, “IQOS is not an acronym but a brand name created to denote innovation and game-changing technology coupled with advanced science, and that we could protect and use in many markets.”
IQOS is currently sold “in key cities in Andorra, Armenia, Bulgaria, Canary Islands, Canada, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominican Republic, France, Germany, Greece, Guatemala, Italy, Israel, Japan, Kazakhstan, Korea, La Réunion, Latvia, Lithuania, Moldova, Monaco, the Netherlands, New Zealand, Palestine, Poland, Portugal, Romania, Russia, Serbia, Slovak Republic, Slovenia, South Africa, Spain, Switzerland, Ukraine, the United Kingdom, and in some ‘Duty Free’ shops,” according to Phillip Morris International’s website.
Heat-not-burn tobacco devices are not available in the U.S. Truth Initiative defines this technology as, “electronic devices that heat tobacco and produce an inhalable aerosol, instead of burning tobacco like traditional cigarettes. Heat-not-burn products are different from e-cigarettes because they use real tobacco, not the flavored liquid nicotine typically found in e-cigarettes.”
Altria has submitted two regulatory approvals to the U.S. Food and Drug Administration (FDA), but has not announced official results as of yet. If approved, IQOS would be sold under the Phillip Morris brand Marlboro, marketed as a “reduced-harm tobacco product.”
On Monday, Altria spokesman David Sutton released a statement thanking the joint subcommittee for their consideration.
“We appreciate the work of the joint subcommittee as it considers how the excise tax code might be modernized to reflect the rapid transformation happening within the tobacco industry,” Sutton said.
“The joint subcommittee’s charge to evaluate the tobacco tax code in light of the emerging innovative, non-combustible tobacco products is timely and important,” he added.
A 30-cent excise and sales tax is currently levied on each pack of cigarettes in the Commonwealth, 1.5 cents per cigarette as directed by Virginia Code §58.1-1000. Furthermore, a cigarette is defined by the state as “any product containing nicotine that is intended to be burned or heated under ordinary conditions of use.”
In Virginia, 31 cities and 57 towns impose a local cigarette tax, while only Arlington and Fairfax counties are able to impose a local tax, which is capped at the same rate as the state levy.
Senate Finance Co-Chairman Emmett Hanger (R-Augusta) stated in the report that he wants to promote “some equalization of taxing authority for counties,” compared with independent cities and towns. However, he reiterated that as all 140 seats in the General Assembly are up for re-election next year, “there’s a hypersensitivity, particularly in the House, to do anything with taxes.”
Therefore, the subcommittee decided not to cement or even allude to potential tax changes in the motion it endorsed unanimously to reconsider the definition of new kinds of tobacco or nicotine products. Regardless, the subcommittee may later decide “to be a little more aggressive with tobacco taxes.”
