Electronic Cigarette Excise Taxes on the Horizon

States have begun limiting the sale of electronic cigarettes and where they can be used, and placing regulations on them similar to the strict regulations on tobacco cigarettes.

The governments rush to regulate electronic smoking devices probably has more to do with taxes than protecting public health.

According to WBUR media analyst John Carroll in a recent article, federal, state, and local government are tobacco-money addicts, which is why there’s a rush to regulate electronic cigarettes. Below outlines the money government receives from big tobacco:

  • Forty-six states receive approximately $10 billion annually from tobacco companies thanks to the 1998 Master Settlement Agreement
  • Extortionate federal and state excise taxes on every pack of cigarettes sold in the U.S. In 2007, states increased excise taxes on cigarettes by $1 billion
  • 2012 federal cigarette excise taxes equaled $14.8 billion out of a total of $43.3 billion in overall taxes and settlement payments on cigarettes

Electronic cigarettes aren’t a cash cow like traditional cigarettes because presently they’re subject only to state sales tax, but that’s about to change. USA Today reports that at least 30 states are contemplating excise taxes on electronic cigarettes.

The debate about electronic cigarette health hazards and regulation will undoubtedly continue, but one thing is certain: Government officials will soon be addicted to electronic smoking tax revenues.