Taxing E-Cigs

Keeping up with technology is hard. It’s harder for laws. Bills to tax e-cigarettes are swirling around the country, let’s look: 

• Utah looks to gain $10M in revenue by taxing e-cigs
  • The debate notes that nicotine replacements (gum, patches) are not subject to excise taxes
• Minnesota taxes e-cigs
  • By taxing them like packs at $2.90 
• North Carolina taxes e-cigs
  • By taxing the liquid nicotine at the rate of 5-cent per milliliter 
• In 2014, these states introduced tax legislation for e-cigs: Delaware, Hawaii, Indiana, Kentucky, New Jersey, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington
  • Indiana will tax e-cigs like cigars and impose a licensing requirement on stores that sell e-cigarettes
  • Washington state wants to raise traditional cigarette pack tax and tax e-cigarettes to generate $56M in revenue
• Michigan Governor last week vetoed an e-cig tax because it wasn’t harsh enough

What would be the potential impact?

• Close small businesses that sell e-cigarettes
• If the price is driven up, tobacco, which is cheaper, would see a sales boom

What are the tax trends?

• Tax e-cigs like cigarette packs
• Tax e-cigs like cigars
• Tax e-cigs like nicotine patches or gum
• Tax liquid nicotine, but not the e-cig device
• Tax the business that sell e-cigs by imposing business licensing requirements.

Governing