Tobacco cigarettes are heavily taxed as means to discourage smokers from their deadly habit of smoking. Thus, when Governor Chris Christie proposed his NJ ecig tax, many were appalled because taxing products that obviously help smokers wean off their cigarette consumption is far from reasonable.
One of those who do not support the NJ ecig tax is NJ’s Assembly state budget point man. He made this statement after hearing the sides of all witnesses who did not approve the proposed tax on electronic cigarettes by Governor Christie.
Assembly Budget Committee Chairman Gary Schaer stated that he and the members of the committee (both Republicans and Democrats) also oppose the tax proposal. He is also a smoker who uses ecigarettes occasionally.
He told those witnesses that they have caught the legislators in the bipartisan spirit. Both sides did not see the governor’s proposed tax is unneeded and unwanted. The testimonies made by the witnesses gave the legislators a significant perspective.
Ecigs Are Not Government Income Steams
Governor Christie called for an ecig tax at the same rate by which normal cigarettes are taxed at $2.70. It is still not clear how this would be applied to the electronic cigarettes. Outlined last February, Christi’s proposed budget estimated that this tax to be collected from ecigarettes could amass up to $35 million in one year. Schaer stated this amount of money should be generated somewhere else and not from ecigarettes.
He added that his opposition is not entirely a kill for the proposal. The final say will still come from the Assembly Speaker Vincent Prieto. According to Prieto, it was only the start of the budget process and he could understand Schaer’s comment on how overly-taxed New Jersey is. He said that this matter will be considered and discussed.
It also remains unclear how the proposal would be dealt with in the Senate considering that there are two other Democrats, Senators Richard Codey and Joe Vitale, who have their own ecigarette tax versions.
NJ Ecig Tax Opposed By The Industry
Obviously, increasing the tax on electronic cigarettes will have an impact on the industry. According to the SFATA analysis, federal ecigarette taxation will cause 20% drop on ecig sales, which is certainly uncalled-for.
Taxes on the combustible cigarettes are approved in order to offset the expenses of the government for the medical needs of those affected by smoking-related illnesses. These smoke-related expenses put strain on the government’s health care system, said CEO of Cigirex Jason Cardiff. Ecigarettes should not be levied this way because vaping generates no harm or additional health-care expenses.
Sales of the devices are soaring and according to some people, lawmakers are pushing onerous ecigarette taxation because they are scared of the immense losses from the decreasing cigarette sales.
According to VMR Products (maker of V2 cigs and Vapor Couture) CEO Andries Verleur, ecigs threaten the government’s revenue from sin taxes. Lawmakers set their heart on the wrong products for ensuring they will not lose revenue, but states pushing ecig taxes are threatening the public health that should have been lawmakers’ priority.
Bonnie Herzog, analyst at Wells Fargo Securities said that ecigarettes can surpass conventional cigarettes if the industry will not be slowed down by regulations. The category is now worth $1.85 billion and could outpace combustibles in the next ten years.
Cardiff stated that they have seen an annual growth rate of 100-300% in the past 6 years for Cigirex ecigs. Their disposables ecigarettes are sold $6.95-8.95. One Cigirex disposable is equivalent to one pack of cigarettes.
Verleur said that VMR sales doubled last year and it is now the third best ecig company worldwide with 9 figure sales. He confidently believes that ecisg will replace conventional cigarettes, but misguided regulations like excessive taxation will hinder the innovation and will deprive consumers of healthy cigarette alternatives.