State Proposes Absurd Tax on Electronic Cigarettes

If you’ve successfully replaced cigarette smoking with electronic cigarettes, take note, the Hawaii state Legislature would like to tax you as if you were still smoking. Both the House and the Senate have introduced bills to classify electronic cigarettes as tobacco products, in order to do two things: prohibit their sale to minors and levy the same 70-percent tax on them that the state levies on actual tobacco products, such as real cigarettes, cigars, pipe tobacco, snuff, etc.

One small problem with the bills: electronic cigarettes do not contain tobacco. At all. Dismantle one and all you’ll find is a battery, a heater and solution of water, glycerin and nicotine. The fluid, when heated, creates a smoke-like vapor that is odorless and non-toxic and decidedly not smoke. Nicotine comes from tobacco, but is not itself tobacco—otherwise, why else are nicotine gum, lozenges and patches routinely sold as safe alternatives to smoking and as stop-smoking aids? (Of course, none of these nicotine-laced products are included in this anti-e-cig bill, a telling detail).

Perhaps a metaphor will help our confused legislators. Both coffee and Coke contain caffeine, but a can of Coke contains absolutely no coffee, so any attempt to legislate Coke as if it were a coffee product would be laughable.

So, fine, the state wants to prohibit the sale of anything with nicotine to minors. Do it with a bill that doesn’t completely distort the meaning of the word “tobacco” beyond all recognition.

What the state really seems to want is the tax revenue. I’ve written about this before: governments have perversely immoral incentives to make sure as many smokers keep smoking as possible, because governments are hooked on cigarette tax revenue. For example, see my September 2006 column, “Double Bind,” about Hawaii’s dependence on cigarette taxes to fund trauma services.

If these bills pass and electronic cigarettes and all their accessories (batteries, chargers, etc.) are subject to the same taxes as actual cigarettes, then a certain number of smokers will choose to stay with tobacco cigarettes. A certain number of those people will, with statistical certainty, die needlessly of heart disease or cancer. If the state actually cared about our health, it would offer tax incentives to smokers who switch to electronic cigarettes (or, to be fair, nicotine gum, patches, lozenges, etc.) Instead, I think some legislators have panicked over the prospect that people are successfully replacing taxed cigarettes with a un-taxed non-tobacco substitute and are in a hurry to redefine that alternative as tobacco for the sole purpose of grabbing the cash. Heaven forbid you should find some pleasurable activity the state hasn’t found a way to tax!

There’s also a public hearing on the bills tomorrow, Feb. 8, at 9 a.m., conference room 211 at the Legislature. I can’t attend, wish I could. I’d love to have someone ask a state legislature to point to the tobacco in this tobacco-free product. Full disclosure, I use electronic cigarettes to keep myself away from the real thing. It works, for me. Other than that, I have no financial stake in this issue other than this: I don’t see why I should be taxed like a smoker when I’m not smoking.

2/15/12: UPDATE: Looks like wisdom prevailed in the hearing. State senators deleted language in the bill that would’ve levied tobacco taxes on electronic cigarettes and moved it forward solely as a bill restricting the sale the sale of electronic cigarettes to minors. More info.

This article appears in the February 2012 issue of HONOLULU Magazine.