Taxes Discourage Smokers from Switching to E-Cigarettes

March 23, 2016 Taxation in USA

WASHINGTON D.C. – Poorly planned tax measures may prevent smokers in the USA from dropping the habit in favor of less harmful e-cigarettes.

On March 22nd the US think-tank the Tax Foundation released a new report on the taxation of electronic cigarettes in the USA, calling for state governments to ensure that they do not tax the new vaporizer technologies in the same way that they would tax traditional tobacco products.

In its report the Tax Foundation noted that vapor products have been shown to be less harmful to humans than traditional cigarettes, and called on tax authorities to ensure that new tax measures do not inadvertently discourage current smokers from switching to this less damaging alternative.

Currently only four states in the USA charge a separate tax on the sale and supply of e-cigarettes, although over the course of this year an additional 23 states are set to debate or implement taxes on vapor products.

So far tax authorities have opted to tax vapor devices based either on the value of the product or on the specific volume of vaporizer liquid being sold.

The Tax Foundation called on governments to forego taxes based on value, as such measures discriminate against disposable vaporizer devices and, instead, favor refillable products.

It was noted that cheaper disposable devices are often preferred by low-income individuals due to their lower initial costs, and the disproportionate value-based tax measures would prevent low-income smokers from taking up vaporizers instead of cigarettes.

Photo By: Matt Trostle