Policy Documents

Research & Commentary: Oregon Electronic Cigarette Tax

November 5, 2013

The Oregon Legislature is considering a bill to place an excise tax on electronic cigarettes or “e-cigarettes.” Currently, Minnesota is the only state with an excise tax on e-cigarettes

E-cigarettes have become one of the most popular nicotine replacement products, with the total market expected to reach $1.7 billion this year. Proponents of the proposed tax in Oregon argue e-cigarettes contain nicotine and should be taxed at a similar rate to cigarettes. 

E-cigarettes have proven effective at helping smokers reduce their cigarette use or quit altogether. Several studies have found e-cigarettes are an effective and viable option for smokers seeking a satisfying and safer cigarette substitute.  One group, The American Association of Public Health Physicians, has concluded e-cigarettes could “save the lives of 4 million of the 8 million current adult American smokers.” Adding new excise taxes would increase the tax burden and hinder efforts to promote these products to smokers trying to quit. 

Minnesota first started taxing e-cigarettes in 2010 by changing state tax law to define tobacco products as any product derived from tobacco and intended for human use, which includes e-cigarettes. In 2013 the state increased the tax on e-cigarettes and smokeless tobacco products to 95 percent of the wholesale price. Minnesota’s tax policy equates e-cigarettes to conventional tobacco products, ignoring the fact that e-cigarettes are effective substitutes for conventional cigarettes that pose a significantly reduced risks to users and to bystanders. 

Minnesota’s new tax places an excessive burden on e-cigarettes, disrupting an increasingly popular and successful method of helping Americans reduce or quit smoking. Oregon should avoid making the same mistake and resist preemptively imposing taxes and regulations and instead focus on logical measures such as expanding existing age restrictions to e-cigarettes

The following documents examine electronic cigarettes and efforts to regulate their sale and use, from multiple perspectives.

Oregon Lawmakers Debate E-Cigarette Taxes
http://finance.yahoo.com/news/oregon-lawmakers-debate-e-cigarette-002007452.html
As the demand for e-cigarettes grows, Jonathan Cooper of the Associated Press examines the debate between Oregon lawmakers on the potential taxing of electronic cigarettes.

Regulating, Taxing E-Cigarettes
http://rodutobaccotruth.blogspot.com/2013/05/regulating-taxing-e-cigarettes.html
Heartland Institute Senior Fellow Brad Rodu argues new taxes on e-cigarettes are likely to be imposed, and he makes suggestions on how states should implement these taxes.

Will Taxes and Regulation Rein In the Booming E-Cigarette Market?
http://www.forbes.com/sites/danielfisher/2013/10/02/will-taxes-and-regulation-rein-in-the-booming-e-cigarette-market/
Daniel Fisher of Forbes discusses the likely effect of new regulations and taxes on the emerging e-cigarette market, speaking with several sources on both sides of the debate.

Research & Commentary: Electronic Cigarettes
http://heartland.org/policy-documents/research-commentary-electronic-cigarettes\
Heartland Institute Senior Policy Analyst Matthew Glans examines electronic cigarettes, tobacco harm reduction, and various proposals to regulate e-cigarette use. E-cigarettes have become one of the most popular nicotine replacement products and a key building block in tobacco harm reduction strategies. 

Research & Commentary: Age Restrictions for Electronic Cigarettes
https://heartland.org/policy-documents/research-commentary-age-restrictions-electronic-cigarettes
Matthew Glans of The Heartland Institute reports on the debate over what taxes and regulations should apply to electronic cigarettes, including efforts to regulate their sale to and use by minors.

Electronic Cigarettes at a Regulatory Crossroads
http://object.cato.org/sites/cato.org/files/serials/files/regulation/2013/9/regv36n3-8n_3.pdf#page=7
Writing in Regulation, Thomas Hemphill outlines the various regulatory paths state and federal governments might take in their efforts to regulate e-cigarettes. 

Tobacco and Tobacco Products at a Crossroads in the 21st Century
http://heartland.org/policy-documents/tobacco-and-tobacco-products-crossroads-21st-century
Tobacco and health policy consultant Scott D. Ballin outlines several considerations he says must be part of the debate if improvement in harm reduction is to continue. 

The Clueless Crusade to Ban E-Cigarettes
http://reason.com/archives/2013/08/28/the-clueless-crusade-to-ban-e-cigarettes#comment
Writing for the Reason Foundation, Nick Gillespie discusses the effort to ban e-cigarettes and the motivation behind such bans. 

Electronic Cigarettes Are the Tobacco Harm Reduction Phenomenon of the Year—But Will They Survive?
http://heartland.org/policy-documents/electronic-cigarettes-are-tobacco-harm-reduction-phenomenon-year-will-they-survive
Paul L. Bergen and Courtney E. Heffernan offer a brief history of the e-cigarette and a discussion of the merits and limitations of e-cigarettes in tobacco harm reduction.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit The Heartland Institute’s Web site at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org

If you have any questions about this issue or The Heartland Institute, contact Legislative Specialist Matthew Glans at 312/377-4000 or mglans@heartland.org.