Troutman Sanders tobacco team partner Bryan Haynes was quoted in a February 24th Law360 article titled “States Acting Hastily In Pushing E-Cigarette Taxes.”
Faced with the growing popularity of e-cigarettes and the relative decline of traditional cigarette consumption, some states are looking for ways to make up their decreasing tobacco tax revenue. Oregon, Hawaii, and Rhode Island have all recently introduced legislation that would impose an excise tax on e-cigarettes.
However, if the traditional wisdom regarding tobacco taxes – that they are ostensibly levied to offset the social costs of smoking – is applied to e-cigarettes, the science to back up that assumption is lacking. There is no evidence that e-cigarettes pose the same risks associated with traditional tobacco products. “There are some suggestions in the preamble or legislative notes of these bills that e-cigarettes pose certain public health risks, but I would suggest that the evidence is still emerging,” stated Haynes. “It would be more appropriate for the states to wait and see until all of the evidence has been fully vetted.”
Given the lack of evidence surrounding any potential dangers to public health, taxing e-cigarettes in order to compensate for a decrease in revenue is flawed policy. “As smoking activity declines, state burdens should also decline,” Haynes said. “So you could argue that it isn’t necessary to capture the same amount of revenue because the corresponding burdens aren’t there.”
However, not all states are jumping on the taxation bandwagon. An Oklahoma State Senate panel recently passed a bill that defined e-cigarettes as “vapor products” which would exclude them from taxation under their statute. The bill now moves for a vote before their state Senate.
To read the full article, click here.