On Sin Taxes And Electronic Cigarettes

26 Comments

March 18, 2013

A number of states have considered or are considering imposing a sin tax on electronic cigarettes. In some cases, this would tax e-cigs at upwards of 70%. The goal is to discourage use and — in cases where use happens anyway — get a piece of the action. This arguably makes sense for conventional tobacco cigarettes, but does it really make sense for electronic cigarettes?

Advocates of a sin tax often push two major arguments. First, that making something more costly will force individuals to cut back on or quit the product or activity. Second, the tax is argued to make up for future and current costs the activity inflicts on a government or community. In the case of tobacco cigarettes, some states tax them by as much as $4 and $5 per pack. The hope is to reduce smoking and recoup inevitable future health costs the state will incur taking care of individuals that have smoked themselves into hospitalization.

A sin tax levied against electronic cigarettes ignores two very important things. First, sin taxes are widely disliked and considered a poor tactic for government intervention in the activities of individuals. Second, discouraging electronic cigarette use is more likely to send users back to smoking rather than forcing them to quit altogether.

On the first point, sin taxes are often considered bad policy regardless of the product or activity being taxed. In many cases, a sin tax fails to influence the fundamental consumer behavior being taxed and instead encourages use of the lowest quality, highest concentration version of a products. In the worst case, use of smuggled or black market goods could become rampant. This is particularly the case when neighboring communities exhibit large discrepancies in final market prices.

Sin taxes also raise some fundamental arguments that are seemingly endless. Some feel it shouldn’t be the government’s place to regulate through taxes something that is otherwise an individual’s choice — especially with seemingly unproven social consequences. On average, the life of a healthy individual costs the government more than the life of a smoker, obese individual or alcoholic (who all have statistically shorter lives). Under the second argument for a sin tax (recouping medical costs), cigarettes, sugary sodas, greasy cheeseburgers, and alcohol shouldn’t be taxed at all. Maybe vegetables, yoga classes, and doctor’s visits need a longevity tax instead. But I digress.

On the second point, electronic cigarettes are hardly a sin to tax. Although the research shows that electronic cigarettes do cause some harm, that harm pales in comparison to the harm caused by smoking. Some researchers believe that a lifetime of electronic cigarette use is less harmful that 2 months of smoking. A great many individuals that use electronic cigarettes firmly believe that in the absence of the devices, they would return to smoking. Many individuals that used electronic cigarettes to transition away from smoking an ultimately quit believe they couldn’t have done so any other way.

In short, a tax discouraging use of electronic cigarettes would be an entirely inappropriate use of the idea of sin tax. It would more likely keep smokers smoking than keep new users from taking up the habit of e-cig use. States are being woefully misinformed of the effects electronic cigarettes are having on the market. Anti-smoking individuals still refuse to see anything resembling a cigarette as a promising new alternative. According to a recent report from Morgan Stanley, tobacco cigarette sales declined 4.5% from that which was expected in early 2013. They credited one major change with the bulk of this decline — the massive growth of the electronic cigarette industry.

After all the efforts by anti-smoking groups, the FDA, and various individuals to stop electronic cigarettes, this industry still put a serious dent in the world of smoking. Just imagine what this industry could do with the support these groups were they to get over the emotional response they have to smoking itself.

Comments

26 Responses to “On Sin Taxes And Electronic Cigarettes”

slap_maxwell

Sin taxes are the equivalent of mobsters shaking down businesses for a piece of the action. No more, no less. They try to disguise it as something else, but it is what it is. Mafia-style shakedowns, plain and simple.

Morrinb

Thanks for this info, I personally find sin taxes completely ridiculous.

saboinia

i agree my klause but knowing the us govt they will find a way to tax it….just because

Tyler

great post

DemonFire

I agree with Slap here. It’s just extortion. But I really do like that the cig industry has had less sales!! Go us!!

RCO67

Excellent points of reasoning on how a “sin tax” is inappropriate on ecigs. The greed of the U.S. government is insatiable.

mrcrunch08

This is ridiculous. How are you going to charge a sin tax on something that has much less risk then the alternative. It is like giving nicotine gum a sin tax. I’m calling shenanigans!!!

Ms Puffinstuff

That’s my number one worry with e-cigs. I live in NY State and NY loves a sin tax. It would be so very, very wrong – sinful, in fact – to apply one to a product that has dispositive evidence against it, which e-cigs most certainly do not.

I posted on the forum yesterday that a trip to the doctor showed my blood pressure down significantly just since I switched to e-cigs. That, together with the fact that the coughing and wheezing are gone are enough to tell me that e-cigs have improved my health already and as I’m reaching the age for Medicare pretty soon, that’s supposedly in the government’s interest as well. They really need to leave us alone on this.

Karla Lyle (MsV8PR)

Like Slap stated it sounds like a mob style shake down is exactly what a sin tax is. Next they will start attaching a sin tax to sodas and double cheeseburgers. That would make more sense than to vaping. Just another way for the gov’t to take more of our money. If going by their idea they should be paying us to vape. Most of us are vaping instead of smoking, therefore saving the gov’t future money that would be spent on heath care. This whole thing with the gov’t getting involved just sickens me.

StrickxNyne

We are fighting this in Oklahoma. It seems the only way to get our vape things will be through tobacco companies. Who wins the people we went away from! I say no.

Michelle

A bunch of Bullshit is what it is!!!

Chad

The idea of a “sin” tax is stupid. They better not tax my ecigs.

Lfddavid

A sin tax, the only thing that big brother cares about is an increase of tax revenue.

Avon Jon

As mentioned in the article, the government just wants a “piece of the action”. Unfortunately ecigs will be taxed eventually giving smokers no incentive to quit. Either way, the government will get their cut.

Donald Hammond

More BS with the government trying to tax the crap out of us.

Nev NYC

E-cigs are the best if not the only way most ppl can really quit smoking. To put such a tax on them would only keep smokers smoking and would lead many pply who vape back to smoking. This is so crazy but i would not be surprised by any ridiculous moves our government makes any more. Thanks for sharing!!

Todd

Tax my ecigs like normal and I won’t gripe up and down – but this 70 or 80% nonsense that has come up here and there is simply bullshit. Yes, punish me for choosing a safer alternative… the nerve of me quitting smoking! *shakes fist*

Danielle

Absolutely ridiculous. They’re not worried about your health..they’re worried that they’re not getting every last dime of your money.

Danielle

People who are in support of the government regulating/banning e-cigs aren’t looking at the big picture.. They’re in favor of that because they don’t use them, but the government isn’t going to stop there, and pretty soon they’re going to try to ban/restrict things that they DO use. Grown adults don’t need to be babysat, and taxing people into the poor house doesn’t help them get over addictions.

Johnathan Brown (Sepsis)

its great that ecigs reduced the tobacco sales by almost 5%, but that sadly means more eyes will be focused on it from the government and FDA as well. Hopefully they give credit where credit is due.

Courtney C

As ridiculous as the “sin tax” is, it hasnt worked much in the ways of getting smokers to quit, just switch to a cheaper brand. Supply and demand, if people want it, they’ll get it.

miok

With a 5% reduction in cigarette sales, that’s a 5% loss of cigarette “sin tax” revenue. Making up for the short fall is why they want to tax ecigs and has little to do with preventative health. I have been cigarette free for over 2 years. This would never have happened without ecigs. I was in the beginning stages of COPD and this is no longer the case, not to mention all the long term benefits of eliminating carcinogens, carbon monoxide and tar. Most smokers I know want to quit, but can’t. Without ecigs, I know I would struggle to remain smoke free.

Ralph

welcome to government oppression

stogismkr

IMHO its the tobacco companies behind it due to the loss of the 5% they suffered.

ManuDawg

The only possible explanation for the government/states wanting to “sin tax” electronic cigarettes is they want a piece of the pie. The argument that they should be “sin taxed” and the funds should be used to cover health care costs for vapers is ridiculous. Discouraging people from using ecigs should be a crime since you are more than likely sending them back to traditional cigarette smoking, future health problems and smoking related disease and death. Sin taxes are never acceptable, in my opinion, but to sin tax something that is helping people quit a habit that will surely lead to illness is completely unjustified.

Aggnizzle

And the government wonders why absolutely no one likes them at all.

Feel free to leave a comment...
and oh, if you want a pic to show with your comment, go get a gravatar!

On Sin Taxes And Electronic Cigarettes

Check out these related posts:

Comments