ATR Opposes Governor Christie’s Proposed Tax Hikes on Small Businesses and E-Cigarettes
New Jersey Governor Chris Christie recently presented his budget recommendations to the legislature for the next fiscal year. Though the proposal holds the line on most significant taxes, it does contain a number of tax law changes that would result in higher taxes on small businesses and consumers.
The first misguided budget recommendation is to tax vapor products like e-cigarettes and e-liquid on the same basis as traditional cigarettes, which are currently taxed at $2.70 per pack. Small businesses like convenience stores and especially brick and mortar vape shops will be hardest hit by this $35 million tax increase. This is particularly troubling in a time of tepid economic growth and in light of the 20 new and higher federal taxes that have been imposed by Congress in the last few years.
Taking aim at e-cigarettes works at cross-purposes with efforts to cut down on the harm associated with smoking. A number of studies have shown that electronic cigarettes stand to improve health and prevent disease. By choosing to “vape” e-cigs instead of smoking traditional tobacco, consumers get their nicotine fix without the combustion and smoke, which are responsible for many of the negative health effects of tobacco cigarettes.
The imposition of new taxes on innovative products that reduce smoking and people’s dependence on tobacco cigarettes is misguided and will impede proven harm reduction methods.
The second budget proposal imposes $28 million in new taxes annually on sales of purchases made by New Jersey residents through out-of-state online retailers. Similar to the federal Marketplace Fairness Act, this proposal is a violation of the U.S. Constitution, which provides that Congress shall regulate interstate commerce, not the states. Making small businesses the tax collector for the state will burden them with compliance requirements that will ultimately increase costs for New Jersey consumers.
Making little progress on New Jersey’s uncompetitive tax climate may be somewhat understandable given Democrats’ obsession with a traffic jam on the George Washington Bridge but the opening proposal for a budget compromise should never include higher taxes.
Americans for Tax Reform president Grover Norquist sent a letter to the New Jersey legislature outlining our opposition to these new and higher taxes, which can be read here (pdf).
Photo Credit: Gage Skidmore