Federal Legislators Push to End Advertising Tax Break for Vapor Products

Sens. Shaheen and Blumenthal first introduced legislation in September 2019.
A calculator and Tax Break written on a sticky note

WASHINGTON, D.C. — Two federal lawmakers are trying to close another loophole concerning electronic cigarettes and vapor products.

On Feb. 16, U.S. Sens. Jeanne Shaheen (D-N.H.) and Richard Blumenthal (D-Conn.) reintroduced the No Tax Subsidies for E-Cigarette and Tobacco Ads Act, which would crack down on e-cigarette companies and close a tax loophole that allows manufacturers to claim federal tax deductions for the cost of advertising for e-cigarettes and tobacco products. 

"E-cigarette and Big Tobacco companies must be held accountable for their use of targeted advertisements towards young people. These dangerous products are fueling a public health crisis — especially among teenagers," Shaheen said. "Taxpayers should not foot the bill for these harmful marketing campaigns. That's why I'm reintroducing this critical legislation, which will close a tax loophole that allows companies to write off the costs of their ads and hold e-cigarette companies responsible."

Shaheen and Blumenthal first introduced the bill in September 2019. They were joined by U.S. Sens. Dick Durbin (D-Ill.), Jack Reed (D-R.I.) and then-Sen. Kamala Harris (D-Calif.).

"Tax breaks for tobacco and e-cigarette giants allow the industry to profit from its manipulative marketing. Our legislation ends these write-offs to protect kids and other consumers from being lured into lifetimes of addiction. I'm proud to join Senator Shaheen in this effort to stop Big Tobacco from hooking the next generation," Blumenthal said in reintroducing the bill.

According to legislators, TV and radio advertising for traditional tobacco products have been banned under federal law, and certain other forms of Big Tobacco advertising are restricted under the 1998 Tobacco Master Settlement Agreement. However, none of these restrictions apply to e-cigarettes. While some television outlets have started pulling e-cigarette ads from the air in response to the ongoing youth vaping crisis, the ads are still being run by other outlets, they added.

To ensure parity between e-cigarettes and traditional tobacco, the Shaheen and Blumenthal bill also bars tax deductions for advertising expenses related to tobacco cigarettes, cigars, snuff, chewing tobacco, pipe tobacco and roll-your-own tobacco.

U.S. Sens. Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.), Reed and Durbin also joined in reintroducing this bill.

For the full text of the legislation, click here.

Over the past few years, lawmakers, tobacco companies and retailer groups have been pushing to bring rules and regulations for vapor products in line with those for other tobacco products. 

In late 2020, Congress passed the Preventing Online Sales of E-Cigarettes to Children Act that applies the same safeguards already in place for traditional cigarettes and smokeless tobacco products. The legislation was sponsored by Sens. Dianne Feinstein (D-Calif.) and John Cornyn (R-Texas), and U.S. Reps. Rosa DeLauro (D-Conn.) and Kelly Armstrong (R-N.D.).

Most recently, RAI Services Co. petitioned the Food and Drug Administration (FDA) to endorse an enforcement policy targeting illegally marketed disposable electronic nicotine delivery systems. The policy would close an existing loophole in the FDA's current tobacco enforcement efforts, especially when it comes to youth, as Convenience Store News previously reported.