Tag Archives: e-cigarette taxes

Taxing Electronic Cigarettes

E-Cigs and TaxationBy 2017, it is expected that the electronic cigarette industry will be raking in around $10 billion yearly. Presently lingering around $2 billion, a 5 times increase is not a trend to be balked at. What these numbers also spark discussion of is taxes, because like any product industry that gets hot, it’s going to get taxed.

The ongoing debate on how electronic cigarettes are classified in regards to being considered “tobacco” products is a direct indicator of how they may or may not be taxed in the near future. Especially relevant to the discussion of “special taxes,” it is rather apparent that e-cigarettes should not be considered tobacco products, because simply, they do not contain tobacco.

The “special taxes” in question are what are known as “excise” taxes, and they have been implemented in recent years, particularly by interests of the anti-e-cigarette movement, who see the income potential of these products, particularly because so many smokers have switched to using them instead of traditional cigarettes.

While currently the only state taxing e-cigarettes in the same methods as traditional cigarettes is Minnesota, there are several more considering taking the same action, including Indiana, Kentucky, New York, New Jersey, Oregon, Rhode Island, South Carolina, and Washington. In the past, Hawaii, Oklahoma, and Utah attempted the similar measures of e-cigarette taxation, however their efforts were not successful.

In Minnesota, their Department of Revenue has estimated that their taxation of e-cigarettes is slated to be bringing in somewhere in the proximity of $1.16 billion due to the combined taxation of e-cigarettes and tobacco products in the 2014 – 2015 fiscal year. Not a figure to be taken lightly, and it is certainly setting an example for other states to compare notes on.

And though the money looks great, there is the moral side of the story to consider. And the fact that vapers will not go down without a fight. And that there are many thousands of small businesses that will be majorly impacted by such taxation. So, as attractive as taxing e-cigarettes may appear, for cities and states that implement such measures, it will not be a clear-cut or easy road ahead.

E-Cigarettes & Taxes

uncle-sam-taxesThere has been so much talk and rumors abound for a while regarding e-cigarettes, ranging from what sort of regulations we will be seeing from the FDA, and what the government plans on doing about taxation. We all know this has been a hot button issue for so many reasons, as electronic cigarettes and other alternative smoking products have completely changed the landscape of smoking. Here’s what is presently occurring in the US regarding taxes on e-cigarettes, and what we can expect in the future.

Many e-cigarette users fear that their popularity will encourage lawmakers to seek higher taxing of the products due to their displacing of traditional cigarettes, which have always brought in millions upon millions of dollars. This would drive the price of the products up in a drastic way, making them unaffordable to many. To this point, cities and states have been on their own to decide how electronic cigarettes should be taxed. Some have instituted excise taxes, however there is still pressure from lobbyists, anti e-cigarette groups, city and state policymakers, among other special interests groups who are seeking to tap into the ability of taxing electronic cigarettes in the same manner as traditional cigarettes.

The problem with that, however, lies in the fact that alternative cigarettes are not tobacco products, and they contain no tobacco. Many sates, such as Hawaii, Utah, and Oklahoma, have attempted implementing taxes, but they have been met with failure. Other states are still contemplating such moves, seeing the immense potential of bringing in billions of dollars.

While the future remains to be seen, it seems as though taxation is going to be inevitable in some way or another. Like all forms of profit, taxes are just part of the big picture, however we can only hope that things are done in all fairness.

Electronic Cigarettes and Taxation

imagesE-Cigarette regulations have been a big source of discussion in recent times, and even with the FDA ruling that regulations regarding their usage by minors are necessary, many users are still wondering where talks of taxing electronic cigarettes will go.

Many are concerned that electronic cigarettes will soon be taxed similarly traditional cigarettes, as many people, most notably legislators, are pushing for them to regarded in the same manner. Among the states considering taxing electronic alternatives are Rhode Island, South Carolina, Indiana, Kentucky, Oregon, Washing, New York, New Jersey, and Indiana. They see this form of taxation as a positive gesture because the revenue on e-cigarettes is growing, and with sales encroaching upon the $2 billion mark, and expected to hit around $10 billion worldwide by 2017, the potential of taxation looks promising to legislators who see the move as beneficial to the economy.

The city of Olympia, Washington has been pushing for a high tax on e-cigarettes and accessories for some time now. Their House approved at 75% tax on e-cigarette products, however the committee is attempting to amend this bill, which is currently slated to incur $35 million yearly just for the city of Olympia. A taxation of this magnitude goes beyond even the taxes currently implemented on marijuana, alcohol, and even some types of tobacco products, which seems rather incongruent in terms of fairness.

However, this sort of drastic taxation, which would clearly drive the prices of electronic cigarettes and their accompanying products to much greater expenditures, will not be met without immense controversy and debate from the electronic cigarette community. A large portion of small business that specialize in e-cigarette products would be detrimentally affected, and the industry as a whole would see decreases in sales if this sort of taxation were to become national.

While no major decisions have been made, with this burgeoning industry comes the impending decisions on how to handle the massive sales electronic cigarettes continue to bring in. Many feel that e-cigarette taxation is merely a matter of time away, and we all hope that the most fair, practical decisions be made without harm to the industry. Electronic smokers deserve the products they want, without unfair costs attached.


The Current State of Electronic Cigarettes

Electronic cigaretteWith each year, electronic cigarettes prove to be even more successful than years prior, and they have currently reached the status of widespread acceptance and a certain level of normalcy. They are continuously used by celebrities, as well as by thousands of others who are choosing to live better without the smoke. And there is very good reason why: e-cigarettes offer the same pleasure and sensations as traditional cigarettes without the smoke, tar, residual odor, and inconveniences that come with burning.

Financially, each year the industry has grown massively. In fact, the growth has been so rapid that since 2012, tobacco companies have slowly come over to the electronic side, with Lorillard being the first with their acquisition of a major e-cigarette company.

However, with this expedited growth, and the subsequent decline in traditional tobacco cigarette sales, federal and state governments are looking to recoup lost income from taxes, and e-cigarettes are their target. As many states have started implementing e-cigarette sales bans, restricting their usage in public places, and attempting to categorize them as traditional cigarettes, it leaves the question to be asked about the motives behind these strategic movements. Is it a public health issue or does it really come down to finances?

Currently, 46 of the 50 states are receiving an approximate $10 billion annually from taxes of tobacco companies, as a result of the 1998 Master Settlement Agreement. Seeing that tobacco sales continue to lessen, and electronic cigarettes are currently subject only to sales tax, 30 states are contemplating taxing electronic cigarettes to cut losses and make gains where smokers are using alternatives.

While government regulation is certainly imminent, only time will tell what that means for the electronic cigarette industry. Most people involved are vying for restrictions that include age verifications, ingredient labels, clear information on manufacturing practices, and others that validate the quality because they make sense. However, legislation that benefits only governments, and impedes smokers who want affordable, legitimate alternatives to cigarettes is simply wrong.