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09/17/2021

NACS Speaks Out Against Potential Federal Excise Tax Increase

The U.S. House Ways & Means Committee approved a package that calls for $2.2 trillion in levy hikes.
Tobacco Tax

ALEXANDRIA, Va. — NACS is urging its members to voice their concerns about the federal $3.5-trillion reconciliation package and its possible effects on the convenience channel.

As NACS reported, the House Ways & Means Committee approved its portion of reconciliation, which encompasses $2.2 trillion in tax increases.

Within the package is a proposed increase in the federal excise tax (FET) on tobacco and nicotine products. This language is from a bill that was introduced earlier this Congress, the Tobacco Tax Equity Act, the association noted.

The Tobacco Tax Equity Act of 2021 would close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation and setting the federal tax rate for all other tobacco products at this same level, as Convenience Store News reported this spring.

NACS opposes the move, saying "an increase of this magnitude because it will push current users to the illicit market where products are unregulated, and age isn’t verified, which undermines the responsible efforts of convenience retailers."

The unregulated sale of tobacco products "negates the health protections that Congress intended when it passed the Tobacco Control Act in 2009," the association added.

The Family Smoking Prevention and Tobacco Control Act of 2009 gave the FDA regulatory control over tobacco and any deemed tobacco products.

"The convenience industry's tobacco retailers invest millions in in age verification and compliance to ensure convenience stores are in full compliance with federal, state and local laws. Additionally, the industry collects and remits the appropriate taxes," NACS stated.

The association joined with the Energy Marketers of America, NATSO and SIGMA to voice their collection opposition to an FET increase to leaders in the U.S. House of Representatives and members of the House Ways & Means Committee opposing the increase in the FET for these reasons.

In addition to a proposed tobacco tax increase, NACS said it is concerned about the cumulative effect that the various tax increases will have on the convenience industry. It launched two calls to action, asking members to contact their federal legislators to tell them that now is not the time to pass an FET increase and other "potentially crippling tax increases while the U.S. economy continues to struggle to fully recover from the effects of the COVID-19 pandemic."