A Taxing Issue

Posted 12th November 2019 by Dave Cross
The U.S. House of Representatives’ Ways and Means Committee met recently to hear from experts about the impact of taxing vape products. They heard from representatives of the American Vaping Association and Georgia State University economist Michael Pesko among others, but then voted in favour of a 2.78 cents per milligram nicotine tax.

The committee was meeting to discuss a bill seeking to amend the Internal Revenue Code of 1986 to impose a tax on nicotine used in vaping.

“E-cigarette taxes will increase the purchase and use of cigarettes”, Georgia State University economist Michael Pesko told the politicians.

“Our results suggest that while cigarette taxes reduce cigarette use, and e-cigarette taxes reduce e-cigarette use, they also have important interactions on each other. E-cigarettes and cigarettes are economic substitutes. So, if you raise the tax on one product, you will increase use of the other product.”

In addition to the potential for a future national tax on e-cigarettes, several states are adopting e-cigarette taxes. E-cigarette taxes started on Oct. 1 in Connecticut, Ohio, Washington and Wisconsin, and e-cigarette taxes are scheduled to be enacted on Jan. 1 in Maine and Nevada. This activity will bring to 20 the number of states with e-cigarette taxes.

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“Despite the recent news about vaping deaths,” Pesko added, “e-cigarettes are thought to be only five percent as harmful as cigarettes for non-pregnant adults. Adopting a national e-cigarette tax proportional to the cigarette tax could harm public health by pushing people to use a more dangerous product – cigarettes.”

“Some people would argue that harshly regulating e-cigarettes is justified if e-cigarettes are a gateway to cigarette use, but the evidence does not back up that theory as youth cigarette use has been rapidly declining while e-cigarette use has been rising.”

The politicians didn’t listen and voted 24-15-1 in favour of recommending the passage of the bill.

American Vaping Association’s Greg Conley commented: “This $10 billion tax increase will harm public health by discouraging low-income adult smokers from switching to nicotine vaping. It will do nothing to stem the tide of contaminated illicit THC vaping products that are causing illnesses and deaths. Rather than slamming thousands of small businesses with a regressive tax hike that could make vaping more expensive than smoking cancer-causing cigarettes, Congress should be working to enact sensible regulations on both vaping products and marijuana.”

 Dave Cross
Article by Dave Cross
Freelance writer, physicist, karateka, motorbikes, and dog walker
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