Taxes imposed by legislators on products deemed dangerous or “bad”, i.e., alcohol, tobacco, gambling or even gasoline, are referred to as ‘sin’ taxes. These taxes are often hidden from consumers and aren’t always recognized for what they are – TAXES. The fundamental debate about sin taxes is ongoing, with the primary concern being whether or not its the government’s responsibility to enact laws to protect adults from legal activities and how far can they go before they squash an individual’s freedom.
In the case of tobacco, supporters would argue that sin taxes are a benefit to society because they discourage tobacco-use and play a key role in reducing smoking rates, but where do we draw the line? One of the most publicized debates about sin taxes occurred last year when the mayor of New York proposed a tax on soda and other sugar-laden drinks; a money grab that was hidden behind a professed concern about the welfare of the citizens of New York (sadly it passed). Since then, “soda taxes” have been proposed in multiple states and municipalities, but thankfully most of the attempts have failed.
States Proposing Taxes on E-Cigs
For the past 12 months, e-cigarettes have become the new target of sin taxes; a product that’s unlike tobacco, alcohol or even sugar, in that it HAS NOT been proven to be harmful. As with all taxes, there is no direct benefit to consumers; but they bear the burden of all of the costs. The irony is that rather than being a hazardous activity, e-cigarettes may be helpful aides to anyone who wants to quit smoking. Many people who have successfully used e-cigarettes to transition away from smoking are convinced they couldn’t have done so by any other means. And the risks associated with e-cigs are drastically lower than tobacco, a product that kills thousands of people each year.
A Dubious Scheme That Pays Off
Despite lawmakers’ claims, the political agenda behind sin taxes is apparent. No matter how it’s packaged or sugarcoated, the purpose of a sin tax is to raise government revenue, and with the supposed goal of discouraging use, legislators are happy to get a piece of the action. To imply that making something more expensive will cause people to quit or curtail usage is not supported by the facts. Alcohol and tobacco use have dropped over the last 20 years, but in my opinion, that’s primarily due to increased public awareness about the dangers of these products.
The other fallacy advocates claim is that money generated by sin taxes will be used to further discourage use and to cover some of the damages inflicted by these products. Take a look and see where tobacco and gambling revenues go in your state… they typically go back to the general fund where they’re used for any number of purposes outside of healthcare or cessation programs.
Why Lawmakers Should Think Twice
With the growing popularity of e-cigarettes, there’s a lot money to be made by imposing new taxes. Some states have even gone so far as to suggest a tax upwards of 90 percent. But if the lawmakers’ real objective is to influence consumers away from e-cigarettes, they should think again:
- Electronic cigarettes HAVE NOT been proven to be dangerous
Despite the media’s love for negative headlines, the majority of research (thus far) suggest that e-cigarettes pose very little risk to users and ZERO RISK to bystanders. Attacks by the media and lawmakers seem to be based solely on fear, not on facts. Just because it looks like smoking and may contain nicotine (a mild, non-carcinogenic stimulant), DOES NOT mean that it’s smoking.
- Electronic cigarettes help smokers quit
Although there have been conflicting reports about the effectiveness of e-cigarettes on smoking cessation, most of the research suggests that e-cigarettes are at least as effective as other quit-smoking methods, such as the nicotine patch and gum (products that ARE NOT independently taxed). In a recent study published in the May 20th journal of Addiction, smokers were found to be 63% more likely to quit with electronic cigarettes vs. OTC nicotine replacements.
- Consumers are more likely to keep using tobacco
By raising prices and attempting to discourage electronic cigarette use, lawmakers may unwittingly be sending users back to a known killer – cigarettes. At the same time, smokers will be less likely to quit or to use electronic cigarettes as an alternative if there are no financial benefits.
- Vapers may be driven to use black market products
People who want to continue to avoid smoking may opt for cheaper, black-market vaping products to save money. With no oversight or accountability, these products may be produced using unsafe manufacturing practices resulting in even more risk to consumers.
- Huge financial savings on healthcare costs!
If e-cigarettes are significantly less harmful than tobacco and can help smokers quit, which virtually all of the studies suggest, then it’s safe to assume that many of the healthcare costs associated with smoking can be reduced or eliminated. In 2004, smoking cost the U. S. over $193 billion, including $97 billion in lost productivity and $96 billion in direct health care expenditures – an average of $4,260 per adult smoker. If this number could be reduced by just half, it would more than makeup for any lost tax revenue generated by electronic cigarettes.
- Disdain about overreaching government intervention
You’d be hard pressed to find many people who appreciate over-regulation by federal, state and local governments. This is especially true when the science doesn’t suggest a danger or the necessity for government intervention to protect consumers.
No Justification for Taxation!
No matter where you stand on the debate about sin taxes, an important question to ask yourself is, should they apply to electronic cigarettes? Sin taxes, by nature, are designed to penalize consumers for “bad” behavior that is deemed a detriment to society. Smoking has been proven to be deadly, increases public health care costs and poses a direct risk to innocent bystanders. The same can be said about alcohol, and some medical experts claim that sugary drinks are a root cause of our obesity problem in the U.S. But where is the evidence that electronic cigarettes pose a public health risk that requires swift government intervention? I can list numerous studies to the contrary, but in either case, there’s not nearly enough evidence (on either side) to make a conclusive argument yet.
So do we simply tax an item because we’re “worried” that it’s dangerous? What if the medical experts are right and e-cigarettes can actually save lives and reduce healthcare costs for everyone? Unfortunately, the real motivation for taxing e-cigs isn’t public health, it’s the dwindling tax revenue being generated by tobacco. If lawmakers want immediate gratification – they’ll get it – but it certainly won’t do the public any good to discourage a product that limits smokers’ health risks. Increased tax revenue may bridge the gap for now, but in the long it will cost us all.