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20 March 2013 Rep.

Doug Cox, Chairman Oklahoma House Public Health and Social Services Committee 2300 N. Lincoln Blvd. Oklahoma City, OK 73105 Dear Chairman Cox, I write to you in reference to SB 802, which would change the definition of certain tobacco products and implement a new tax on vapor products such as electronic cigarettes. To be sure, ATR supports the idea that some tobacco products should be taxed at lower rates that reflect their comparative risks to consumers. Vapor products are less harmful than cigarettes, for example, and we believe their respective tax liabilities should reflect that, without raising taxes on net. Unfortunately, SB 802 levies a new tax on products that are not currently taxed in Oklahoma. Some argue that vapor products will be taxed in the near future at a much higher rate. ATR cannot take future legislative or executive action into account when evaluating existing proposals. It has also been brought to our attention that by applying an excise tax to vapor products, they may be exempt from the state sales tax. This remains unclear. Absent certification by the Oklahoma Tax Commission ruling that the sales tax would no longer apply to vapor products, a clear fiscal note that shows a net revenue cut, or an amendment to the bill that would ensure that the bill is at worst revenue neutral, ATR is forced to oppose this tax change despite its good intentions with respect to harm reduction. Although ATR must oppose this particular tax change, we remain convinced that emerging tobacco products should be taxed in a way that reflects their relative harm to consumers. Please contact ATR government affairs manager Josh Culling at jculling@atr.org with any questions. Onward,

Grover G. Norquist President Americans for Tax Reform CC: House Public Health and Social Services Committee