New Smokeless Tobacco Products Use Bulk Packaging to Avoid Taxes

Local point-of-sale display of smokeless products
Above:Local point-of-sale display of smokeless products

By BETSY BROCK

Moist smokeless tobacco brands such as Longhorn and Kayak have a new packaging scheme to avoid Minnesota’s minimum moist smokeless tobacco (MST) tax. As of Jan. 1, 2014, a minimum tax is applied to MST products. These products are taxed at 95 percent of wholesale price with a minimum tax of $2.90 per can, which is equivalent to the Minnesota tax on a pack of cigarettes. In most cases, the minimum tax of $2.90 per can is much higher than 95 percent of wholesale price. However, brands such as Kayak and Longhorn are packaging 12 cans worth of smokeless tobacco into one giant tub and applying the minimum “per can” tax of just $2.90.  As a result, these products are extremely cheap. For example, the Kayak “Man Can” (see picture) retails for $19.99 for the equivalent of 12 cans of MST. The minimum tax alone on 12 separate cans of MST would be $34.80. Clearly, this packaging method is achieving its intended goal.

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