The Atlanta Journal-Constitution
State fights brewing over e-cigarette taxes
Lawmakers cite efforts to raise revenue, discourage teens’ use.
SUNSET, UTAH — Taking a long inhale and blowing a cloud of vapor, Jason Jones, who has owned the Vapor Mania store here since 2011, considered what a tax would do to his business, which includes selling electronic cigarettes as well as manufacturing a wide variety of flavored nicotine liquids to go into them.
“I think we’d be out of business, or at least it would make it much harder to do business,” said Jones, 34. “I think it would drive people back to cigarettes because they would be cheaper.”
With an eye on the twin concerns of public health and raising revenue, Utah is one of many states considering taxing electronic cigarettes, the battery-powered devices that deliver vaporized nicotine and provide the look and feel of smoking without the smoke and tar of traditional tobacco products. Gov. Gary Herbert, a Republican, sparked this year’s debate when he included a footnote in his budget counting on $10 million from taxing e-cigarettes.
“I feel strongly that we should tax electronic cigarettes similar to the way we tax other tobacco products,” said Herbert, calling it a public health issue. Herbert and supportive lawmakers say a tax would slow the growing use of electronic cigarettes while raising revenue for the state.
“There are some who think these new products are not harmful, but just like traditional cigarettes, they contain nicotine and other toxic and addictive substances,” Herbert said. “Flavoring and marketing targeted to make these products enticing to youth is particularly concerning.” Without being specific, Herbert called for a tax on e-cigarettes “similar” to the taxes on cigarettes, cigars and snuff.
But e-cigarette users say the devices should not be subject to the excise taxes levied on traditional cigarettes. They argue that the devices are healthier, and liken them to nicotine patches and nicotine gum, which help smokers reduce their dependence on cigarettes and are not subject to excise taxes.
Jones, a former mixed martial arts fighter, said he gave up traditional cigarettes and turned to “vaping” because “sports and cigarettes don’t mix.” As for the candy flavors, Jones argued that “adults like candy, too,” citing “gummy bear” adult vitamins and designer chocolates.
Minnesota and North Carolina already tax e-cigarettes. Last year, e-cigarette tax proposals were introduced in 12 other states: Delaware, Hawaii, Indiana, Kentucky, New Jersey, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington, according to Tobacco E-News, an industry publication for sellers of tobacco and nicotine products. None of them passed.
With the popularity of e-cigarettes growing, more states are more likely to look to the new devices for revenue. Republican Michigan Gov. Rick Snyder recently vetoed a package of bills designed to regulate and tax e-cigarettes, saying it wasn’t tough enough. His veto sets the stage for further debate in the legislature this year.
“This is going to be one of the most introduced and debated topics in state legislatures this year, especially the tax issue,” said Max Behlke, analyst for the National Conference of State Legislatures. Behlke noted with fewer people smoking traditional cigarettes, a revenue stream that states depend on is decreasing. Taxing electronic cigarettes is a way to recoup some of that money.
Utah state Rep. Paul Ray, a Republican, proposed a bill last year to tax e-cigarettes that would have amounted to about an 86 percent tax on the product, about the equivalent of the amount Utah taxes cigars. The state’s cigarette tax is $1.70 a pack. He argues that young people who have never smoked are taking up the electronic version and his tax is aimed at pre- venting them from starting.
“I’m not doing it for the revenue,” he said, “I’m doing it to keep it away from kids.”
Republican Utah state Sen. Curt Bramble, whose committee would consider any bill to tax e-cigarettes, said the debate will revolve around whether e-cigarettes are an entryway to traditional tobacco products or a tool to help people stop using them.
“While it’s true from the data that e-cigarettes are a great way to break the habit of smoking, there are those who also claim that e-cigarettes are enticing people to take up the habit because of the flavors and because it’s the ‘in’ thing to do,” he said. Bramble said extending taxation of tobacco taxes to ecigarette products would be appropriate.
According to the Centers for Disease Control and Prevention, the percentage of adults who have used an e-cigarette at least once rose from 3.3 percent in 2010 to 8.5 percent in 2013. The percentage of current cigarette smokers who have used an e-cigarette increased from 9.8 percent in 2010 to 36.5 percent in 2013, the CDC said. Former cigarette smokers who have used an e-cigarette increased from 2.5 percent in 2010 to 9.6 percent in 2013.
The use of e-cigarettes by young people also shows an uptick. In its latest report on youth and cigarette smoking, the Utah Department of Health young people were more likely to report the use of electronic cigarettes than regular cigarettes. Some 3.9 percent of teens and pre-teens that Utah surveyed last year reported smoking cigarettes, while 5.8 percent reported using e-cigarettes.
The University of Michigan’s “Monitoring the Future” study, which tracks children and youth, showed in December 2014 that among teens, the use of e-cigarettes had surpassed the use of regular cigarettes.
The U.S. Food and Drug Administration is in the process of writing regulations for electronic cigarettes. In the meantime, a handful of states have prohibited their sale to minors and have passed laws banning their use in public buildings. In Utah, the signs say “no smoking or ecigarettes” on the patio at the Buffalo Wild Wings in Midvale, packed to overflowing for the NFL playoffs. The debate has gone national as well, with the American Vaping Association, based in New Jersey, on the side of the e-cigarettes and the Campaign for Tobacco-Free Kids organization opposed.
It’s a complicated issue. In reply to those who say vaping is a gateway to tobacco consumption, groups like the Utah Smoke-Free Association contend the practice contributes to, rather than degrades, public health.
Brian Fisher, 31, a truck driver from Spanish Fork, Utah, and a member of the smokefree group, said the devices saved his life. Diagnosed with lymphoma five years ago, “I tried everything to get off cigarettes, and couldn’t do it,” he said. “I found out about vaporizers and they saved me, basically. I want to share this with everyone I know.”