Beating the tobacco tax

I saw a guy inhaling from an e-cigarette in a theater lobby the other night.  That seemed to be OK.  Now Lorillard is buying a company that makes them.  And there’s a loophole.  “Prices for e-cigarettes vary greatly but can cost half as much as traditional cigarettes, which are heavily taxed.”  “Got a Light—er Charger? Big Tobacco’s Latest Buzz,” Mike Esterl, WSJ, April 26, 2012, http://online.wsj.com/article/SB10001424052702304723304577365723851497152.html

These products don’t cause noticeable second-hand smoke, and they are touted as healthier.  But it’s hard to figure they should be tax-free.  As of this 2010 posting, they seem to be getting away with exemption:  “One of the frustrations of smokers today is ever increasing state and federal excise taxes on tobacco. Whether you’re smoking traditional cigarettes or use smokeless products like snuff or leaf tobacco, the cost of those habits has increased dramatically in the last couple years.

“For now, smokeless electronic cigarettes are not subject to these taxes so it costs much less to enjoy these novel products.” http://www.blog.modernvapor.com/vaping-news-and-insights/smokeless-electronic-cigarettes-not-subject-to-tobacco-taxes.htm

Once again, government lags behind.  This reminds me of the way “synthetic marijuana” beats the system until legislatures catch up.

Advertisements

Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s