Recently, Utah Rep. Paul Ray introduced legislation (House Bill 88) to impose a whopping 86% excise tax on tobacco –free electronic cigarettes and vapor products. The tax, which was lowered to 29% in committee, serves as a harsh penalty on an estimated 110,000 Utahans who use e-cigarettes as a means for quitting or reducing their use of cigarettes.
The tax push comes at a time when the international consensus is that e-cigarettes are at least 95% less harmful than traditional combustible cigarettes. Unlike traditional cigarettes, e-cigarettes are free from tobacco, tar, and other carcinogens that make cigarettes harmful.
Over the past decade, e-cigarettes have emerged as an innovative and effective market solution that empowers smokers to quit tobacco use by transitioning towards a significantly less harmful alternative. Notably, this is a goal public health advocates have failed to achieve for decades.
A punitive excise tax on these life-saving products threatens to put them out of the reach of those who need them most. Lower and middle-income consumers compose the overwhelming majority of smokers, and many spend up to 25% of their income on tobacco. Imposing a regressive and steep excise tax on e-cigarettes directly hinders the ability of low and middle income consumers to afford to try a safer alternative to smoking tobacco.
Proponents argue these attempts to tax e-cigarettes are based on increasing public health, however, the real motivation is to preserve the massive windfall from exorbitant tobacco excise taxes. Since 1998, more than $500 billion has been transferred from consumers and businesses to the government from tobacco taxes and the federal Master Settlement Agreement with tobacco companies.
As consumers continue to switch to tobacco-free products, politicians have scrambled to replace revenues from tobacco taxes with e-cigarette taxes. Rather than pursue damaging tax hikes on life saving products, legislators should allow the free market to empower individuals to better their health.
Representative Paul Rey's attempt to hike taxes on 110,000 Utahans in 2018 comes as no surprise, considering he has pushed this tax every year for the last several years. Rep. Ray has also declined to sign the Taxpayer Protection Pledge, a written commitment to voters to oppose tax hikes.
ATR strongly urges Utah legislators to protect Utah e-cigarette consumers and public health by rejecting House Bill 88. ATR’s letter to the Utah Taxation & Revenue Committee can be found here.