I’ve suggested taxing e-cigs by nicotine content. Here’s another view in CAPS: some excerpts from an interesting post from the Tax Foundation that takes the other side:
“NICOTINE CONTENT ALONE DOES NOT DETERMINE NICOTINE ABSORPTION. DIFFERENCES IN ELECTRONIC CIGARETTE DEVICE DESIGN, AS WELL AS NICOTINE PRODUCT DESIGN, HAVE BIG IMPLICATIONS FOR HOW MUCH NICOTINE IS ABSORBED BY THE CONSUMER.” I don’t doubt that, but don’t know enough about it.
“NICOTINE IS THE ADDICTIVE SUBSTANCE IN THE PRODUCTS, BUT NOT THE MAIN HARMFUL INGREDIENT.” I thought it was the main harmful ingredient. But the non-drug substances in vapor can’t be good for the consumer.
“TAXING BASED ON NICOTINE CONTENT WOULD FAVOR LOW-NICOTINE LIQUIDS AND COULD ENCOURAGE INCREASED CONSUMPTION IN QUANTITY OF LIQUID. FOR INSTANCE, A 3 PERCENT NICOTINE-CONTAINING VAPOR POD WOULD BE TAXED AT $0.68 WHEREAS A 5 PERCENT VAPOR POD WOULD BE TAXED AT $1.15.” But wouldn’t consumers be seeking nicotine directly, and thus be indifferent between low-nicotine and high-nicotine liquids? That is, wouldn’t they titrate, vaping until they got enough? Taxing by volume of liquid, without regard to nicotine content, would incentivize the production of high-nicotine products. If nicotine is “not the main harmful ingredient,” such an incentive would be OK. But is vaping itself the harm-producer?
“TAXING BASED ON NICOTINE CONTENT WOULD REQUIRE EXTENSIVE TESTING, AND ENFORCEMENT WOULD BE EXPENSIVE.” Canada is taxing liquid cannabis by THC, but I don’t know the cost of enforcement. I suppose nicotine testing would be similar.
Still thinking here. It looks like a key question is whether it’s nicotine or vaping generally that should be the target of the tax. I’m listening.
The Center for New Revenue 