Tax cut for ‘modified risk’ tobacco added to Georgia House vape bill

Feb. 28 2017 - Atlanta -  Rep. Brett Harrell, R - Snellville, presents HB 204, which would prevent Property tax bills from adding non ad valorem items, such as garbage fees.  It passed, passed 111-61.  The 26th legislative day of the 2017 Georgia General Assembly.  BOB ANDRES  /BANDRES@AJC.COM
Feb. 28 2017 - Atlanta - Rep. Brett Harrell, R - Snellville, presents HB 204, which would prevent Property tax bills from adding non ad valorem items, such as garbage fees. It passed, passed 111-61. The 26th legislative day of the 2017 Georgia General Assembly. BOB ANDRES /BANDRES@AJC.COM

Credit: Bob Andres

Credit: Bob Andres

A proposed tax on vaping and other nicotine products would also cut the tax rate for one type of smokeless tobacco in half.

The latest version of House Bill 864 says any products deemed "modified risk" by the U.S. Food and Drug Administration can be taxed at half the rate it would be if it did not have that designation. The FDA allows tobacco products to use the term "modified risk" once the agency finds the product has lower risks of disease and other adverse effects associated with tobacco.


Currently, only one product, General Snus, has been cleared to use the label. The product is a powder enclosed in a small bag, usually put inside the user’s bottom lip. Four more, including similar products from R.J. Reynolds and Copenhagen, are in the application process.

If HB 864 passes, General Snus’ tax rate would go down from 10% to 5%. Smokeless tobacco products like General Snus are taxed at a rate of 10% in Georgia, while cigarettes are taxed at a rate of 37 cents per pack. All tobacco taxes, including the proposed vape tax, are in addition to Georgia sales taxes.

A standalone tax cut for modified risk tobacco products failed in the House in 2018 by a nearly 2-to-1 margin. At the time, no product had received the modified risk designation. House Ways & Means Chairman Brett Harrell, R-Snellville, said it’s appropriate to introduce the tax cut now because there’s a product available that the FDA has determined to be less dangerous than others.

“I don’t ever use the word ‘safe’ because we know there’s a level of risk with all of these products,” Harrell told the AJC. “The designation would suggest that it’s not more safe, but it’s less risky.”

Modified risk tobacco products were not originally addressed in HB 864; the bill began as a 7% excise tax on vaping products, which currently only face Georgia sales tax. It also would require licenses for stores that sell the products.

Amendments including the modified risk tobacco tax were added by Harrell before the House Ways and Means Committee voted on the bill last week. Harrell didn't file the original bill, but sponsor Rep. Bonnie Rich, R-Suwanee, was sick and unable to attend the committee meeting. Harrell said Rich "was aware of all the modifications." Rich did not respond to a request for comment Friday.

An amendment was also added to raise the age to purchase tobacco or vaping products in Georgia to 21, a move that was made by the federal government in January.

The changes to the tax structure and the addition of the modified risk tax cut concern health organizations, said Andy Freeman, government relations director  for the American Cancer Society.

“This bill creates a much lower tax rate for tobacco products which will encourage kids to start using tobacco products and encourage adults to continue,” Freeman said. “No one’s asking for the modified risk to be added.”

Harrell's argument in favor of cutting taxes for the modified use products includes the years of research that go into the FDA's decision. General Snus was denied in its first application to use the term in 2016, and was approved in October 2019.

Medical groups were supportive of the original bill; a representative from the Georgia Academy of Family Physicians testified in favor of it at a February subcommittee hearing, as did multiple doctors and nurses.

“Rep. Rich’s original bill for 864 was a much better bill than what was substituted for it in committee,” Freeman said. “What we’re left with is a bill that it seems the only people supportive of it are Big Tobacco and the people who sell tobacco products to kids.”

Harrell believes the bill is now stronger, citing the increase of purchase age to 21 and amendments giving the Georgia Department of Revenue further oversight over businesses selling vape products.

“This is a very strong bill to respond to an illegal activity,” Harrell said.

The bill awaits a full House vote.

The governor updated the public in a news conference on Thursday.

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