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Why Taxes on Electronic Cigarettes Can Be Bad

Posted on Jul 24, 2017

Why Taxes on Electronic Cigarettes Can Be Bad

There has been new talk about levying additional taxes on electronic cigarettes. A group of North Carolina lawmakers are now thinking of putting additional taxes on devices that vaporizes liquid that is filled with nicotine. Electronic cigarettes have become one of the fastest growing business segments in the world and by estimate the sales will double that of 2013 record sales.


Currently, most states like North Carolina do not impose excise tax like what the government has done with tobacco. Electronic cigarettes do not contain tobacco but the nicotine that is in the liquid that is being vaporized is derived from tobacco. This is the reason why the FDA has able to gain jurisdiction on electronic cigarettes despite the absence of tobacco and classified it as a tobacco product.


Electronic cigarettes are different from burning tobacco because they don’t sport the thousands of chemicals. Burning tobacco is perhaps the most toxic substance that humans deliberately put in their bodies. It is perceived by Americans as the most toxic where alcohol and sugar coming in second and third based on a recent survey. Each year six million people die around the world from smoking-related deaths, according to the World Health Organization. On top of that, another 600,000 people die from secondhand smoking yearly worldwide.  


The legislation is aiming to collect taxes at a rate of five cents per milliliter. Some of the electronic cigarettes in the market have less than a milliliter of nicotine-filled liquid but has a yield that is equal to a pack of conventional cigarettes. If the measure pushes through, the State is poised to get $2.1 million in additional revenues per year on the first year with subsequent increases in the years following.


Electronic cigarette makers are open to the tax measures as long as the tax category is independent with other tobacco products or traditional cigarettes. It is just not the same.


The problem with taxing electronic cigarettes the same way as traditional tobacco products is that we are only preventing smokers to make the switch to healthier alternatives. True, that electronic cigarettes may have inherent risks but the risks are fewer and less harmful than what smokers get from conventional cigarettes. That alone should be a measure of incentive that smokers should get from the government. A shift could signal smokers getting less sick and impacting less the health care system which has been spending a lot to treat smoking-related illnesses.


If the electronic cigarettes are taxes too much, there would be no difference between conventional and electronic cigarettes in the long run. It does not make sense to buy a device that does not cause cancer that is priced or even more expensive than one that can cause health problems and may end up the cause of death.


Smokers will no longer think about switching because the nicotine hit and the throat kick they get in electronic cigarettes are milder compared to tobacco. They would just stay and bet on tobacco even if it kills them. There is no sense in spending more money and still end up killing killed.


The industry may opt for a milder tax bracket that is going to be a win-win solution to all that is involved. Government needs to strike a balance in finding a way to encourage smokers to end their habit though electronic cigarettes and at the same time not ending up spending a lot.


Smokers need to get incentives for having the guts to switch despite the fact that the nicotine experience can go down.