E-cigarettes

D.C. Budget Would Hike Taxes on E-Cigarettes to 70 Percent

Taxing e-cigs the same as analogs will put local vape shops out of business, and still won't discourage vaping-or increase revenue.

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Washington DC to put a 70 percent tax on e-cigarettes
www.vaping360.com / Flickr

E-cigarettes aren't "tobacco products," but to the Washington, D.C., city council, that's just semantics. The proposed 2016 budget includes an amendment to "include 'vapor products' in the term 'other tobacco product,'" a change that, if passed, will allow the city to tax e-cigarettes at the same rate as their combustable forebears. According to an August 2014 memo from the Office of Tax and Revenue, "the rate of tax applicable to wholesale sales of other tobacco products is 70%."

D.C. has already experienced firsthand the effects of excise tax hikes. When it raised the tax on cigarettes by 25 percent in 2009, instead of revenue increases, the city lost income. As Reason's J.D. Tuccille noted, "Politicians simultaneously want to maximize revenue and raise taxes so high that they discourage…socially unacceptable tobacco consumption. Those are not compatible goals."

High excise taxes cause consumers to take their dollars elsewhere, Tuccille argues. And D.C. vape shop owners see that reality as the end of the line for their burgeoning businesses.

"That would double our prices, at least, and make it very difficult to stay in business," says Eric Miller, owner of DC Vape Joint, one of the handful of local shops specializing in e-cigs. "There's no way people are going to spend double the price for the same thing they've been getting. They'll just go to Virginia or Maryland, or they'll go online."

Sean Robinson, owner of District Vape, echoed Miller's concerns: "The tax is really geared toward big tobacco, which can take the hit," he says, but "mom-and-pop shops" like his won't survive if the budget passes in its current form. Several of the more ubiquitous e-cig brands (like Blu) are owned by tobacco conglomerates, but shops like Miller's and Robinson's specialize in smaller boutique brands. 

"Taxes like this hand the market over to the bigger companies," says Alex Clark, legislative director of the Consumer Advocates for Smoke-Free Alternatives Association (CASAA).

The CASAA website features a post asking visitors to call and voice their concerns to the D.C. Council, and Miller and Robinson have been asking the same of their customers. But Robinson says he doesn't think the Council realizes the effect the change will have on local businesses like his.

The D.C. budget amendment isn't the first time lawmakers have tried to morph the definition of "tobacco" to include e-cigarettes. In January, an Arkansas state representative introduced a dedicated vaping tax, which is still under consideration. And in December of last year, Reason's Jacob Sullum reported on an attempt by three members of Congress to retroactively include e-cigs in a Master Settlement Agreement (MSA) that resolved state lawsuits against the tobacco industry by restricting Big Tobacco's ability to advertise. As Sullum pointed out, the maneuver wouldn't work:

First, as Michael Siegel notes on his tobacco policy blog, the MSA defines a cigarette, in part, as a product that contains tobacco. E-cigarettes do not contain tobacco. Durbin et al. argue that they sorta do, "because their key ingredient is nicotine, which is produced from tobacco leaves." By the same logic, THC is marijuana, quinine is cinchona bark, electricity is coal, milk is a cow, and maple syrup is a tree.

The D.C. Council is scheduled to vote on the proposed budget June 30.

Check out Reason's coverage of the New York e-cig ban:

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29 responses to “D.C. Budget Would Hike Taxes on E-Cigarettes to 70 Percent

  1. Creating a vaping black market? That’s just embarrassing.

  2. Virginia merchants say, “Thanks, dummies!”

  3. No taxation on vaporization!

  4. If nicotine is tobacco then Congress is graft.

  5. For your own good, progressive communists will rule your life. They’re pro-choice, they choose what’s best for you – for your own good.

  6. These articles where the author tries so very hard to twist the facts to conform with their views are pretty poor journalism. More like activism, really. I understand that addiction can affect one’s judgement. It must be very nerve wracking to see that a substance that you are addicted to is getting more expensive and harder to acquire. Nicotine is tobacco refined and purified. Cocaine is coca leaves refined and purified. E-cigarettes may not be a tobacco product, but the nicotine you burn in them is. I guess we could argue the term burn, but heating something up to release volatile chemicals is the primary mechanism in both smoking and vaping. You are still primarily trying to get nicotine into your lungs, and you still pass it to those nearby when you exhale.

    1. Well, well toadboy. I suppose you are a strict vegan who never consumes caffeine or alcohol, does high-impact aerobics for an hour each day, and never drives a car-which you probably don’t need since you work out of your mom’s basement as a paid troll.

      1. Totally not me. not vegan. I do not smoke, but I do not care if others do. I have no opinion on the taxes in dispute. I just think that claiming that the nicotine used in E-cigs is not a tobacco product is illogical. I understand the position many have of not wanting it to be regulated as a tobacco product. But just making such claims over and over again does not make them right.

    2. I bet you smoke lots of 420 too!

    3. “You are still primarily trying to get nicotine into your lungs, and you still pass it to those nearby when you exhale.”

      And this justifies a tax?
      Fuck off, slaver.

    4. By this logic, a plastic bottle is a petroleum product and should receive the same taxation as gas.

      Fucking idiot.

      1. Which is exactly what will happen with a carbon tax…They actually already do tax plastic grocery bags in DC (and even hire secret shoppers to bust stores that don’t charge for them). I have no doubt that plastic bottles won’t be far behind on their to tax list. I live across the Potomac, where there are lots of DC wannabes-fortunately the state of Virginia puts its foot down on many of their sillier proggy schemes.

    5. So you’re going to need to be 18 to buy eggplant parm in your world.

      Interesting.

      1. “Eggplant Parm you taste so good. ..”

        /no longer permitted to be sung by Peyton Manning

    6. Nicotine is tobacco refined and purified. . . E-cigarettes may not be a tobacco product, but the nicotine you burn in them is . . . heating something up to release volatile chemicals is the primary mechanism in both smoking and vaping.

      You are, essentially, taking the exact opposite of the government’s position elsewhere when it comes to medical marijuana (as are the people pushing this in DC).

      There the government says there *is* a significant difference between allowing people to smoke MJ straight and the THC distracts (pills/vapes) that pharmaceutical companies have been working on.

      The government argues that it is OK to take a pill containing THC or inhale a vapor containing it, *because* that is not the same as burning the plant and inhaling the smoke.

      1. Nicotine inhalers have been available for a while, probably at least 5 years before e-cigs came on the scene. E-cigs are nothing more than that plus some flavoring, but they can never be marketed as a smoking cessation device without going through FDA approval.

        You can buy as many inhalers as you want (or nicotine patches or gum for that matter) and never pay a penny in tax; can even get a tax write-off as a health expense. But e-cigs, oh no-we can’t have that!

        Big pharma is very jealous of the e-cig, which is why they are using their sock puppets in public health and the CDC to try and destroy it.

        1. I do not know the answer to this question, but I would like to know… Do the makers of the liquids used in vaping buy their nicotine from the big tobacco companies?

    7. Except that the chemicals in cigarettes most deleterious to health aren’t nicotine. Nicotine isn’t a carcinogen and there’s controversy whether the heat generated by an e-cigarette can cause it to become a carcinogen. There’s also debate regarding whether people around you can inhale a dangerous amount of nicotine if you vape.

      By taxing this at the same rate as ordinary cigarettes, you’re saying that e-cigarettes are just as dangerous. If they’re just as dangerous, then no one should transition to e-cigarettes to kick cigarettes. Keep smoking regular cigarettes, guys.

      So let’s just punish all the people who are trying to stop smoking. If you’re not making the best possible choice for your health (no smoking), then you deserve no favors, right?

      I don’t smoke, but I do know someone using e-cigarettes to break 45-year-long smoking habit. These help her, whereas gum, patches, and ‘cold turkey’ do not. I can’t even understand the logic of trying to make a superior method for quitting cigarettes more inaccessible.

  7. I’m curious what part they want to tax. A serious vaper does not use the disposables which is the only thing even vaguely like a pack of cigarettes.. My vape set up is an e-leaf 30W battery, and an Aspire Nautilus tank. I make my own e-juice. Are they going to tax the battery, the tank, vegetable glycerin, propylene glycol, hard candy flavorings, or nicotine concentrate? Or are they just going to tax the pre-made e-juices? If the latter, a whole lot more people are going to find just how very simple it is to DIY.

    1. Not to mention, how much less it costs.

      Making my own juice is gonna cost me less than $50 for a whole year vs 20-30 a month for premade stuff.

    2. I would bet that disposables are popular among poor vapers, particularly nonwhite ones…

  8. This tax is anti-human.

    The Gawker/Ars Technic children think FUCK BIG Tobacco…
    Fumbling dumbasses are trained to thing like a rat in a cage…
    Squeak, squeak on issues and be super SQUEAKY on issues…
    cuz progressive clouds filled with fucking dumb asses squeak…
    bullshit… this is Gawker/Ars Techfucknic

  9. The government hates e-cigs. With cigarettes, they had a product with relatively inelastic demand (everyone who was going to quit because of price already has), whose users are are about the only people in the US who can be demonized without repercussions of any sort, that they could tax the ever livin daylights out with no political downsides. Along comes a product that makes cigarette demand elastic and whoops there goes the money spigot.

  10. Sometimes you jsut have to roll with it. Wow.

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  14. They just want to make money off of it. I won’t downgrade to regular e-liquid. I will guarantee that! I will move if I have to. I only buy premium e-liquid!

  15. Legalize weed and do this to e-cigs!? How much sense does that make!??? I love my marlboro e liquid, and sure as heck glad I don’t live there!

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