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Senate subcommittee hears competing views on tax break for heated‑tobacco products; lawmakers carry bills over
Summary
The Senate Finance Committee Sales and Income Tax Subcommittee heard industry and public‑health testimony on S.519 and H.4303, which would impose new levies on heated‑tobacco products. Industry witnesses argued for lower, risk‑based excise rates; health groups urged uniform taxation and warned of youth uptake. The committee carried both bills over for fiscal study and invited DHHS and vape‑industry input.
The Senate Finance Committee Sales and Income Tax Subcommittee on Feb. 24 heard testimony on two companion bills, S.519 and H.4303, that would create a new excise levy on cigarettes intended to be heated rather than combusted.
Markups in each bill differ: committee staff said S.519 would add a 1.25‑mill levy per heated cigarette (about 2.5 cents per 20‑pack), while the House bill H.4303 in the packet proposed a larger levy (14.25 mills per cigarette, roughly 28.5 cents per 20‑pack). Grant, the committee staff presenter, said the subcommittee would likely use the House language as the working draft.
Jake Jacobs, director of external affairs for the U.S. Southeast at Philip Morris International, testified in favor of the bills and framed heated‑tobacco products as a lower‑risk alternative to combustible cigarettes. “Heated tobacco products defined as cigarettes intended to be heated in this legislation are a product designed solely for the purpose of helping adult smokers who are looking for a way to get away from smoking,” Jacobs said, adding that the products heat rather than combust tobacco and therefore produce fewer of the combustion products tied to disease.
Public‑health groups pushed back. An unidentified representative of the American Heart Association said the association opposed an advantaged tax rate and urged the committee to amend state definitions so that heated products would be taxed the same as combustible cigarettes. “By granting heated tobacco products an advantaged tax rate, South Carolina will send a message that, as a matter of public policy, we're comfortable with those outcomes,” the witness said, and recommended changing statutory language in sections 12 21 6 20 and 12 21 6 25 to close the gap.
Beth Johnson of the American Cancer Society Cancer Action Network also urged opposition, saying the product is not approved by the U.S. Food and Drug Administration as a cessation aid and warning that lower taxes could reduce proceeds that currently fund cancer research and cessation programs paid for by the cigarette surtax.
Senators questioned witnesses about dual use and second‑hand emissions. Public‑health witnesses acknowledged limits in the data available during the hearing and offered to provide evidence on dual‑use rates and any measurable secondhand exposure.
Senator from Orangeburg offered an amendment at the hearing to add the word “nicotine” to statutory language and to impose a 0.5¢ per‑milliliter tax on vape products, seeking parity across nicotine delivery systems and asking staff to estimate fiscal effects. The committee voted to carry both S.519 and H.4303 over to a future meeting and asked staff to request fiscal estimates from DHHS and to invite vape‑industry representatives to testify.
Next steps: both bills were carried over for additional fiscal analysis and stakeholder outreach; the subcommittee instructed staff to schedule DHHS and vape‑industry testimony before reconsideration.
