According to Americans for Tax Reform, 15 states are currently considering proposals that would create additional new taxes on e-cigarettes and vapor products in a variety of different ways. It’s critically important that vapor businesses and vapor consumers – and those who love them – step up to educate lawmakers. We must encourage them to reject additional taxes on these products!
If you want to take a stand against additional new taxes on vapor products, an important first step is joining to receive free legislative alerts from Consumer Advocates for Smoke-Free Alternatives Association (CASAA) right here so you’ll know when your state is considering new vapor taxes and how you can help.
To help you further, we’ve laid out five reasons that new taxes on vapor products are a bad idea. These “talking points” might help you educate legislators and others about why new e-cigarette and vapor taxes represent horrible fiscal policy and are even worse from a public health perspective. As always, please be polite and respectful when you communicate with elected officials.
- Vapor products are already taxed! It’s estimated that there are now as many as 15,000 new vapor businesses across the country that didn’t exist just a few short years ago. Those businesses are filling vacant store fronts, creating jobs and generating revenues for local, state and federal governments. Businesses pay property taxes. Employees and employers are paying individual income taxes. And those businesses are generating high volume sales on vapor products that provide sales tax revenues to government like any other thriving businesses. It’s inappropriate to target this specific industry for additional, onerous taxes that will stifle business growth and revenues.
- Additional Taxes Would Harm Public Health! Taxing people for smoking is one thing. But taxing them for switching from smoking to the use of a vapor product sends a bizarre and horrible message from a health perspective. In theory, the taxes exist to discourage people from engaging in harmful activities (like smoking or drinking) whose costs are borne by the state – and to reimburse the state for the costs associated with the behavior. No state legislator has presented any evidence that e-cigarette use is causing harm that is resulting in costs that are now being borne by the state, which means the cigarette tax argument doesn’t work for these products. In addition, nearly all adult consumers of e-cigarettes are smokers or former smokers. One of the reasons many people switch away from smoking is because of cost. The last thing we want to do is discourage long-term smokers from switching away from combustible tobacco. If government increases the cost of non-combustible, non-tobacco alternatives via new taxes, more smokers keep smoking.
- New vapor taxes will never come close to replacing lost cigarette tax revenue! One motive driving governments is the desire to replace decreasing tax revenues from cigarettes and decreasing payments from cigarette companies as a part of the Master Settlement Agreement (MSA) with new taxes on vapor products. In short, it’s about the money and government wants yours. The reality is there is no conceivable way (and many have been contemplated) to come close to replacing lost cigarette tax revenues with new taxes on vapor products. Products can be bought by adults in neighboring zero-tax states or online. And the components used to construct modified electronic cigarettes and e-liquids can be bought down the street at your local big box or hardware store. Driving sales outside traditional channels would result in LESS property, sales and income taxes to local and state governments. Additionally, vapor taxes would be an administrative nightmare with little (if any) revenue to show for it.
- New Taxes on Vapor Products Harm Children! The vapor industry and vapor advocates across the country have worked tirelessly together over recent years to pass legislation across the country that banned the sale of e-cigarettes and vapor products to minors. We’ve also worked together to support child resistant caps for e-liquids that mirror the federal standards. The best way to reduce youth access to vapor products is to ban sales to minors and enforce the law. As we have learned over the years, excessive taxes drive sales outside traditional channels and into the black market. You can enforce the law against businesses with a storefront, a sales tax license, employees and a physical presence. It’s much more difficult to enforce the law against someone selling products out of his trunk in a back alley or from a offshore Chinese website.
- Product Safety Will Be Compromised! Excessive, new vapor taxes will have harmful unintended consequences we’ve seen before. The simple reality is that in the rush to tax and regulate products, policymakers are forgetting one important thing – they aren’t taking the time to learn about the products and understand the dynamic marketplace. There is no effective working model to tax these products. There are literally tens of thousands of products and components available in vapor shops, in convenience stores, online and at your local hardware or big box convenience store. The ingredients used to make e-liquid are commonly used in other applications and readily available. Safety and efficacy of products is growing every day. Creating excessive new taxes on vapor products will result in government driving adult consumers away from reputable retailers and manufacturers and instead toward buying their own electronic components and batteries, making their own devices and mixing their own e-liquids. Some do it safely, but some certainly will not and don’t want to –and it will be government policy encouraging such activity because of onerous new taxes on vapor products.
It is critically important that vapor products be affordable, accessible and appealing alternatives for adult smokers and former smokers. Passing new, additional taxes on e-cigarettes helps ensure that will never happen.