Tariffs and import fees on e-cigarettes benefit Big Tobacco

From Stewart Dompe, an adjunct professor of economics at Johnson & Wales University in Charlotte, and Adam C. Smith, an assistant professor of economics and director of the Center for Free Market Studies at Johnson & Wales University:

North Carolina recently levied a five-cent tax on each milliliter of nicotine liquid used by electronic cigarettes. E-cigarettes are a new technology that allow smokers to inhale their fix via a cloud of water vapor, flavor and nicotine, and are widely viewed as an aid for nicotine addicts to kick the habit.

Make no mistake, nicotine addiction is a formidable challenge to overcome. But, vapor is a new, alternative source of nicotine that serves as a stepping stone to help people slowly overcome addiction to the substance. Unlike regular cigarettes, e-cigarettes allow nicotine addicts to calibrate their dosage and slowly taper their consumption, minimizing the discomfort of withdrawal. And, while they are certainly not as healthy as foregoing smoking altogether, e-cigarettes do not contain tar or emit carbon monoxide like traditional cigarettes.

Studies have shown that e-cigarettes are 60 percent more effective in helping smokers to quit than other aids like patches or gum. In addition, 20 percent of the people using e-cigarettes to quit smoking reported that they had stopped using conventional tobacco products.

This trend should be cheered and supported by government officials and advocates for public health. And in some quarters it is. A group of 53 leading scientists published an open letter to the World Health Organization stating that e-cigarettes are part of the solution to quitting smoking, and have the potential to save hundreds of millions of lives around the world.

But here in North Carolina, the five-cent tax on e-cigarettes indicates that public health is not, in fact, top-of-mind. The tax on vapor will only reverse the trend of declining nicotine addiction by increasing the price of e-cigarettes and decreasing the incentive to stop smoking tobacco.

It’s no coincidence that traditional tobacco companies support the recent push by many states to tax nicotine vapor sales: it helps maintain their sales by raising the costs for their competitors. And, it’s becoming increasingly apparent just how dependent state governments are on tax revenues from Big Tobacco – revenues which drop along with sales of tobacco products. As of 2011, 25 states have seen a decrease in tobacco tax revenue over previous years.

Tobacco taxes were sold to the public with the promise that the revenues would be used to promote public health and defray the cost of tobacco-related illnesses, not to simply fill the coffers of depleted state revenues. Yet, we’re finding that states that once waged war on Big Tobacco in the name of public health have become addicted to tobacco taxes and are now cozying up to their former opponents.

The irony, of course, is that states like North Carolina that tax vapor to maintain revenues, put themselves in direct conflict with their previous commitments to public health. Maybe the real way to end our addiction to Big Tobacco is to stop imbibing the promises of Big Government too.

Via [www.charlotteobserver.com]

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