House Budget Committee Chair John Yarmuth, D-Ky., is facing accusations that he is helping tobacco interests with a tax on vaping after the House removed another tax on cigarettes from its Build Back Better spending package.
In doing so, critics say Yarmuth is assigning extra costs to the vaping industry, that not only competes with tobacco, but is thought to benefit public health by providing an alternative to smoking. These types of taxes have also been criticized as highly regressive as they tend to disproportionately impact low-income Americans.
Dubbed the "Yarmuth Amendment," the 2,000-plus page bill passed with a $50.33 tax per 1,180 milligrams of nicotine. The bill specifies that the tax applies to nicotine that's synthesized, extracted or manufactured – whereas cigarettes traditionally include nicotine organically included in tobacco.
According to the Louisville Courier Journal, another provision included in an earlier draft had doubled the rate on cigarettes and cigars and increased "the taxes on chewing tobacco products more than 17 times," but that tax was taken out of the final version of the Build Back Better bill.
The cigarette tax had faced pushback from Gov. Andy Beshear, D-Ky., and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTWGW). Beshear reportedly warned that tobacco farmers and businesses could lose tens of millions in revenue due to the tax.
Commenting on the Yarmuth Amendment, the American Vapor Manufacturers (AVM) told FOX Business, "As head of the House Budget Committee, he gets big donations from tobacco producers in his state, and he stripped out the tax on cigarettes from the final version of the bill."
"I have no idea who inserted that amendment in the bill," Yarmuth said this week in an exclusive interview with FOX Business. "I was the manager, but it was someone else on the committee who filed the amendment, and I didn’t learn about it until later." He added that "the directive to do it came down from leadership."
"It was purely a public health issue, the vaping companies were taxed to make it harder for kids to use their products and to raise the nicotine tax for vaping products, so they were equal to the nicotine tax that cigarettes companies pay," Yarmuth added.
"We were not protecting the tobacco industry. There is no love for tobacco companies among the Democratic Caucus."
Budget Ranking Member Jason Smith, R-Mo., who also serves on the House Ways and Means Committee, said Yarmuth's response was "ridiculous" and showed Yarmuth was being irresponsible.
"His name is on this legislation," Smith said. "And that he would author it without knowing what was actually in it, especially one that was going to have such a damaging impact on working class families. In my opinion, it's irresponsible, and it is a textbook example of what people hate about Washington."
Smith also slammed House Ways and Means Committee Chairman Rep. Richard Neal, D-Mass., for spending "his entire career wanting to become the chairman at Ways and Means only to have his chairmanship hijacked and his bill rewritten by Pelosi. Her own committee chairs have no power essentially."
According to Open Secrets, both sides of the aisle receive money from the tobacco industry. Between 2017-2018, BCTGW gave Yarmuth $1,500. He also received $1,000 from the tobacco industry in 2019-2020, according to Open Secrets. The Kentucky congressman previously received attention for buying cannabis stocks prior to announcing a bill to decriminalize marijuana.
House Speaker Nancy Pelosi's office defended the tax, saying it "simply ensures that the nicotine in traditional tobacco products and the nicotine in e-cigarettes is taxed at the same rate."
Henry Connelly, a spokesperson for, Pelosi, D-Calif., told FOX Business, "Unlike the gas tax hike Republicans tried to add to the infrastructure bill, vaping is not an essential need for working families, and there is significant evidence tobacco companies are targeting health-damaging vape products at teens."
AVM responded by accusing Pelosi and Yarmuth of creating a "public health disaster."
"Speaker Pelosi is wrong on the math, wrong on the science and apparently has not even read the government’s own estimates of the public health disaster this vape tax will cause," said President Amanda Wheeler. Wheeler also pointed to National Institutes of Health (NIH)-funded research, which estimated the tax would result in "approximately a half million extra teenage smokers overall."
Yarmuth's office referred FOX Business to the House Ways and Means Committee. A contact for committee Democrats did not respond to FOX Business' request for comment.
Democratic strategist Ted Trimpa, who represents vaping interests and other clients, said the tax seemed like a play to Big Tobacco and would crush the vaping industry as it can't absorb the kind of taxation the tobacco industry can.
"They [Democrats] know they need to raise revenue and they look to the world of nicotine. Unfortunately, sometimes nicotine just gets defined as tobacco and vape is the new actor on the state. Tobacco is much more sophisticated," Trimpa said, referring to the tobacco industry's political influence.
He added it was "ironic" that "the people that are actually trying to help people get off of smoking are the people that you're actually hurting."
Tim Andrews, director of consumer issues for Americans for Tax Reform, told FOX Business the vaping tax is a "terrible idea for public health" because many people vape to quit their cigarette addiction.
"Raising taxes on products that many low-income Americans use is a terrible idea," Andrews said. "Because it’s a tax on the poor, so I think Democrats realized that this would be an extremely unpopular move, which they would be blamed for by the public, so they took the nicotine tax on cigarettes out and kept the tax on vaping products because it is a new young industry with little power and not as many Americans use vaping as they do cigarettes and might not notice."