Shaheen, Blumenthal and Colleagues Spearhead Bill to Crack Down on E-Cigarette Companies, Close Tax Loophole for E-Cigarette Advertising

September 26, 2019

(Washington, DC) – Today, U.S. Senators Jeanne Shaheen (D-NH) and Richard Blumenthal (D-CT), introduced new legislation – 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. Senators Durbin (D-IL), Reed (D-RI) and Harris (D-CA) also joined in introducing this bill.

 Analysis from the Truth Initiative indicates that in 2015, 82 percent of children age 13 to 17 reported seeing at least one e-cigarette advertisement over the course of a year. In 2014, e-cigarette manufacturers spent more than $115 million on advertising to consumers. The New York Times reported that so far this year, the e-cigarette industry has spent $57 million on TV ads alone.

“With the vaping crisis worsening and e-cigarette use surging among teenagers, we need to hold e-cigarette companies and Big Tobacco accountable for their advertising of these dangerous products,” said Shaheen. “It’s egregious that these companies are able to write off the costs of their ads, which over the years have been targeted at kids. There are hundreds of confirmed cases of vaping-related illness and nine deaths – this has become a public health emergency that demands action. I urge members on both sides of the aisle to join me in my effort to crack down on e-cigarette companies by cutting off tax benefits that help bankroll their advertisements.”

“Big Tobacco is relying on old regulatory loopholes to avoid paying taxes and encourage the use of their new lethal products. This legislation will close a gaping tax loophole and address the critical need to prevent young people from beginning a deadly addiction,” said Blumenthal. 

Television 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. 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.

Senator Shaheen has prioritized efforts in the Senate to tackle the youth vaping crisis. She’s leading legislation – the E-Cigarette Youth Protection Act – which would require e-cigarette companies to pay fees to the Food and Drug Administration (FDA) to help fund federal prevention efforts and ensure that the agency has the resources needed to enforce a future ban on flavored e-cigarettes. She’s also held multiple meetings with students, education, law enforcement and health officials across the state about the ongoing public health concern. Shaheen and Blumenthal introduced the E-Cigarette Device Standards Act of 2019 with Senators Jeff Merkley (D-OR), Lisa Murkowski (R-AK) and Dick Durbin (D-IL) earlier this week, which would set safety standards in the design of e-cigarette and vaping devices to prevent dangerous tampering or modifying of the devices’ delivery systems in ways that are not intended by the manufacturer.

The Trump administration recently answered the call of Senator Shaheen and several of her Senate colleagues in announcing a forthcoming policy to remove flavored e-cigarettes from the market. This announcement followed a letter that Senator Shaheen and colleagues sent earlier in the day, and two previous letters that Senator Shaheen and colleagues sent to the administration over the previous seven months.

Text of the legislation can be found here.