LETTER: Thousands of New Yorkers strongly oppose Part K of S.9009/A.10009 (TED) which imposes a 75% tax on alternative nicotine products
The Honorable Kathy Hochul Governor of New York State NYS State Capitol Building Albany, NY 12224
Dear Governor Hochul,
The Business Council of New York State is joined by leading business organizations and associations representing thousands of New Yorkers, to strongly oppose Part K of S.9009/A.10009 (TED) which imposes a 75% tax on alternative nicotine products. We recognize the intent of this proposal and support the State’s efforts to encourage healthy lifestyles for New Yorkers. However, if enacted, this proposal will have an adverse impact on the health of New Yorkers and disproportionately burden low-income communities. Part K would erect a significant financial barrier to smoke-free alternatives that help people transition away from combustible cigarettes. Under the Biden Administration, the FDA authorized nicotine pouch products such as ZYN following an extensive, multi-year evaluation, with the agency explicitly recognizing their public-health benefit as cigarette alternatives. Penalizing these products through excessive taxation directly undermines
harm-reduction goals and public health progress. It could also reinforce a common misconception that all tobacco and nicotine products are equally harmful, when according to the World Health Organization and all leading medical authorities, nicotine is not carcinogenic.
Imposing a 75% tax on nicotine alternatives, such as oral nicotine pouches, is intended to disincentivize new users, but would also disincentivize adult smokers from switching to a product that would be better for them. The tax will nearly double the price of most nicotine pouches, almost equaling the price of a pack of combustible cigarettes. This will be especially harmful to lower-income communities where smoking is most prevalent. Smoking is an addiction and should be treated as such when developing effective approaches to encourage cessation. Nicotine pouches are an affordable and accessible tool that could help New York’s 1.4 million adult smokers convert to a reduced risk alternative. Considered through the lens of harm reduction, they can serve as a useful resource in improving public health. Imposing a tax on these products will create a new financial barrier for the very people who this proposition intends to help.
Concerns about youth access have also been raised in connection with this proposal. Without question, protecting young people—preventing and lowering their use of these products—is paramount, however, this tax would have little to no impact on youth usage rates. Since the national purchasing age for tobacco products was raised to 21 in 2019, there have been dramatic reductions in youth tobacco use. The National Youth Tobacco survey found that only 1.8% of young people have reported using oral nicotine pouches. Greater emphasis should be placed on youth education initiatives and strict enforcement against retailers who illegally sell these products to minors, rather than limiting adult access to essential harm reduction products.
Another challenge with this proposal is it would accelerate the growth of illicit marketplaces. When products are excessively taxed or banned, criminal networks quickly fill the gap by undermining the law, evading taxes, harming small businesses, and selling products at below-market prices with no regard for age restrictions. New York is already experiencing this firsthand, as illicit e-cigarettes and unauthorized tobacco products flood the State, bypassing regulation, eroding tax revenue, and increasing risks to consumers and communities while ignoring the legal requirement to sell only to adults 21 and over.
While this tax is intended to backfill Medicaid funding cuts, it risks driving healthcare costs even
higher. While the State projects roughly $50 million in new revenue, smoking already costs Medicaid
$7.12 billion annually, a figure likely to rise if excessive taxes push adult smokers away from less harmful alternatives. If reducing Medicaid costs is the goal, the State should maintain lower tax rates on nicotine alternatives. This has proven to be a more effective strategy in other countries and communities. Sweden for example has reduced its smoking rate to 5.6% by maintaining lower taxes and allowing adult access to nicotine alternatives, cutting smoking twice as fast as any other EU country. Adopting a similar approach in New York could lower Medicaid costs, improve public health, and make New York more affordable for all of its residents.
As a coalition of leading business advocacy organizations, we must underscore the enormous financial burden adult smoking places on New York’s employers and taxpayers. Smoking costs the State and employers more than $12 billion annually in healthcare expenses, including over $7 billion in Medicaid costs. It also drives an additional $18.2 billion in lost productivity each year. Imposing excessive taxes that restrict access to affordable, smoke-free alternatives will only exacerbate these costs—harming employers, the workforce, and the State’s economy rather than improving public health.
We appreciate the Governor’s focus on tackling the current affordability crisis and helping working New Yorkers, but this proposal would be a tax on the very people she aims to assist, creating an unaffordable barrier to what could be crucial smoke-free harm reduction tools.
For these reasons, we respectfully urge lawmakers to reject Part K of S.9009/A.10009 (TED)
Sincerely,
The Business Council of New York State Bronx Chamber of Commerce
Brooklyn Chamber of Commerce
Buffalo Niagara Partnership
Business Council of Westchester Capital Region Chamber
CenterState CEO
Long Island African American Chamber of Commerce
Long Island Gasoline Retailers Association
Long Island Hispanic Chamber of Commerce
Manhattan Chamber of Commerce
New York City Black Chamber of Commerce
New York City Hispanic Chamber of Commerce
New York Hispanic Cosmetology & Beauty Chamber of Commerce
Niagara USA Chamber
Northeast Wholesalers Association
Queens Chamber of Commerce
Retail Council of New York State
Uniondale Chamber of Commerce
Upstate New York Black Chamber of Commerce
Upstate United
CC:
Speaker Carl E. Heastie
Majority Leader Andrew Stewart Cousins
In addition to the major New York business and advocacy groups opposing Governor Hochul’s regressive tax proposal above, the following organizations have submitted their own letters of opposition to the Governor and State Legislature:
New York Association of Convenience Stores
Long Island Association
Association for a Better Long Island
Rensselaer County Sheriff’s Department
Many other business groups, advocacy organizations, and law enforcement agencies are preparing similar letters of opposition.
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