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Montana Looks to Tax Vape Products at 74% Montana Looks to Tax Vape Products at 74%

Lawmakers in Montana are looking to join the increasing number of states that are adding e-cigarettes or e-liquid to the definition of tobacco products. If the current legislation goes through, the state would be imposing one of the largest e-liquid taxes in the country.

The proposal is to raise tobacco taxes to help fund veteran’s homes, Medicaid, send money to Native American tribes and fund state infrastructure projects. That is, if people continued to buy tobacco products after the price goes up. Lawmakers who support the increased tax say that they hope the higher costs would discourage people from smoking. Estimates of how much money the state government could make on the increased tax do not take into account the possibility that the deterrent effect might actually be remarkable enough to stop people from purchasing tobacco.

That’s why some opponents of the tax say that if there is actually a need for money for important state projects, then the state should find some more logical way to raise it than a selective tax on only certain consumers.

Most of the opposition to the proposed tobacco tax is due to the plan to include e-liquid. The tax on e-liquid would be an astonishing 74 percent of the wholesale price. Vape shop owners plan to protest the proposed tax, and they say that it not only has the potential to wipe them out of business, but it could also drive smokers who have successfully quit back to smoking cigarettes.

Those in favor of the bill claim that e-cigarettes lead young people to smoking, in fact one doctor from Montana who supports taxing e-liquid made the incredible statement that e-cigarettes not only don’t help people quit smoking, but they actually make it harder for smokers to quit. The doctor appeared to be using the much-publicized surgeon general report on teen vaping as his evidence. The study behind that report actually showed that the majority of vaping teens do not switch to cigarettes, but the results have been spun in the media to suggest the exact opposite.

Vape shop owners and others plan to travel to Helena, the state capital, to protest the inclusion of vaping products in the tobacco tax. There is apparently not much opposition to the plan to raise the tax on cigarettes, which would be an increase of $1.50 per pack, making the total tax $3.20 per pack. The last time Montana raised the tobacco tax rate was in 2005, when it took the tax from 70 cents to $1.75 per pack of tobacco cigarettes.

Among other things, the increased revenue from the tax could give a raise in salary to direct-care workers who assist Medicaid patients. This is not the first time that tobacco tax revenue has been earmarked for public health funds, with the logic being that smokers contribute to overall public health costs and therefore should be taxed to help pay that cost. But beyond the question of whether or not this type of taxation is ethical, there is the greater question of how the situation can work if the increased tax actually cuts down on the number of people buying cigarettes.

Many people believe that this paradox is the very reason that lawmakers are now using e-cigarettes as a way to keep tax revenue coming in after people quit smoking tobacco. When both tobacco and e-cigarettes are taxed, one way or another, smokers will continue to purchase enough of these products to keep tax revenue flowing. But if lawmakers and politicians actually wanted people to quit tobacco for their health and the public health, they would be doing everything they can to encourage smokers to switch to vaping.

Dustin Erickson

Dustin Erickson - ECR.net Editor

Dustin can lay claim as one the first e-cigarette reviewers on the internet. Back in the summer of 2009 he set out on a mission to spread the word about e-cigs with this very site. Nearly 2.5 Million visitors, 1,700 Reviews collected and 5 years later, he’s still as passionate as ever and one of the leading Vaping advocates online.