Money Makes the (E-Cigarette) World Go ‘Round

sales' tax

What states are looking to tax e-cigarettes and what the vaping community can expect from taxation.

The regulations surrounding smokeless cigarettes are a hot-button topic currently involved on many state (and federal) legislatures. One such item of contention is whether e-cigarettes will be treated like tobacco cigarettes. This includes banning their use in public places and levying taxes on their sale.

The forerunner amongst states taxing electronic cigarettes is Minnesota – however, Indiana, Kentucky, New Jersey, New York, Oregon, Rhode Island, South Carolina, and Washington are all considering taxing smokeless cigarettes and accessories. The taxes levied would be anywhere from 20-95%.

Given the odds, each state in the U.S. will eventually debate whether to levy special taxes on e-cigarettes…

Smokeless cigarette taxes would bring in high revenues from their sales. For example, Minnesota’s Department of Revenue estimates that tobacco sales taxes will bring in $1.16 billion during the 2014-2015 fiscal year—which makes taxing attractive with many states still in economic woes.

Wells Fargo states that current sales of electronic cigarettes are around $2 billion annually – however, Wells Fargo suggests that the worldwide profits from the sale of electronic cigarettes may exceed $10 billion by 2017.

Problems with Taxing Smokeless Cigarettes

While the added money that e-cigarette taxes would bring in could help the economy, taxation does come with some problems—mostly in the form of opposition from those affected by the taxes. Heavy taxes would cripple small businesses who specialize in vaping products. Another problem that could arise from taxing e-cigarettes is backlash from the vaping community.

One example of a city that is imposing a high tax on smokeless cigarettes and accessories is Olympia, Washington. The Olympia House approved a 75% tax. However, the committee is looking to amend the bill. This amendment would raise taxes on a $10 bottle of e-liquid to $20. This level of taxation is double what the state levies on marijuana, alcohol, and (in some cases) tobacco cigarettes.

After all is said and done, this proposed raise in smokeless cigarette tax could bring $35 million a year to the city of Olympia.

Current vapers can keep themselves informed on the changing laws surrounding the world of vaping by checking our blog. And for more in-depth analysis on e-cigarettes and taxes, we invite you to read Taxing Smokeless Cigarettes in our knowledge center today.

And if you’re ready to consider a new alternative way of getting the nicotine your body craves, click on over to EverSmoke’s main site for more about smokeless cigarettes.