Tuesday, May 14, 2013

EU politician shows what governments really fear about e-cigarettes

Giancarlo Scottà, a member of the European Parliament from Italy, recently posted this question to his fellow EU  politicians:
"The consumption of traditional cigarettes provides the Member States with sizeable revenues, as a result of the substantial taxes to which they are subject. 
According to a recent report by ANSA (Italian news agency) of 21 April 2013, in the first two months of 2013 alone, Italy’s coffers registered a loss of EUR 132 million, corresponding to a fall in revenue from duty on tobacco of approximately 7.6%. Of course, this shortfall cannot be completely blamed on the increasing use of electronic cigarettes, but it is certainly partly responsible.  
In light of the above, can the Council state what action it intends to take to address the differences in tax revenue materialising in State coffers following the proliferation of electronic cigarettes, which currently appear to be free from any form of duty?"
E-cigarettes: the bad news is...
people are buying fewer cigarettes.

Mr. Scottà's comment clearly shows a concern that increased e-cigarette use will have a huge impact on tax revenues and he strongly hints that taxes on e-cigarettes will be the solution. There is no doubt that this same concern has been expressed in hushed tones and behind closed doors in the hallowed halls of government all across the U.S., as well.

The first reaction of the average citizen is to disregard "conspiracy theories" about our great leaders' willingness to put tax revenues before public health, but Mr. Scottà's comment is proof positive that it isn't just a theory that our governments' opposition to electronic cigarettes is likely to be, in large part, financial. It certainly isn't based on scientific evidence of harm or any other justification for excessive "sin taxes" to be applied to electronic cigarettes. It may not be a conspiracy, but our government shouldn't be more concerned about lost revenue than it is about the well-being of 45 million of its citizens.

The recent attempts by several U.S. states to add sin taxes (different from the sales tax applied to other nicotine products) to electronic cigarette liquid is more evidence that it isn't about our health. Mind you, the ANTZ (Anti Nicotine and Tobacco Zealots) and legislators attempt to justify high sin taxes on cigarettes for two main reasons: 1) the products ostensibly cause health problems for which other taxpayers end up paying and 2) higher taxes means higher cost, which (theoretically) will cause more smokers to quit. However, electronic cigarette use has not been shown to cause health problems and the lower costs associated with vaping actually encourages smokers to quit smoking and switch to a relatively safe product. The only reason legislators have at this time to tax the product differently is to make up future lost cigarette tax revenue, even while doing so would clearly have the opposite effect intended for applying a sin tax to a "harmful" product!

Obviously, increasing the cost of electronic cigarettes (and other smoke-free alternatives) would eliminate a huge incentive for smokers to switch to e-cigarettes. The only people who would benefit from that are ANTZ, tobacco companies, pharmaceutical companies and politicians. People keep smoking and the sales profits, tax revenues and "research" and "smoking cessation" funding keep rolling in. However, as a product which is not likely to increase health care costs to taxpayers (indeed, it is more likely to reduce such costs) and actually encourages quitting smoking, e-cigarettes should not be subject to anything greater than a standard sales tax - the same as any other nicotine product on the market.

Clearly, e-cigarettes have thrown a monkey wrench in the tax revenue gears. Although the ANTZ can honestly claim smoking rates are going down, the number of smokers has changed little over the past two decades - 46 million U.S. smokers in 1990 vs. 45 million smokers today - even as cigarette taxes have increased more than 1,000-fold in some areas. Yet, as populations have increased, ANTZ could still claim their "evidence-based" smoking cessation methods were working, ensuring that their future funding would continue. Governments were secure in the knowledge that the numbers weren't really going down and the tax revenue would keep coming in. Pharmaceutical companies could keep selling their snake oil smoking "cures." They never dreamt that something would come along that actually could significantly reduce the number of cigarette packs being sold! Now that there is, they are running scared. It's not a conspiracy theory, it's just simple arithmetic. Smokers switching to e-cigarettes means less tax revenue - good for smokers, bad for governments addicted to their cigarette taxes.

(Thanks to Dick Puddlecote's blog post today for the inspiration.)


  1. This comment has been removed by the author.

  2. I'm sure as the market goes to ecigs well see more ways for the goverment to make money on it.

  3. Due to the tax free and from high taxes of natural cigarette people are switching to e-cigarettes more and this is really the serious matter fro government too as they got revenue from these cigarettes.http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1931477/