All About The Benjamins: Is Tobacco Tax Income Too Important For Politicians To Lose?
The electronic cigarette industry seems to attract more than its fair share of critics and there are conspiracy theories as to why some politicians seem determined to crush the sector. Ultimately politicians around the world have an obligation to protect the health of the population but there is a growing suspicion that an undue reliance on tobacco tax income is impacting their thoughts?
The fact is that the US authorities have raised billions upon billions of dollars of tax income from the tobacco industry and continue to do so today. Indeed many US states signed a formal agreement with the large tobacco companies back in 1998 which effectively led to the creation of so-called tobacco bonds. These bonds were backed by annual compensation payments from the tobacco companies and were supposed to cover additional healthcare costs associated with smoking. However, it seems to have become part of the everyday budgetary requirements of US state officials.
So, is tobacco income tax really too important to lose?
The situation regarding tobacco income tax is very similar to that afforded to gasoline taxation and the electric car industry. Aside from gasoline tax there is an array of other income streams directly associated with gasoline/diesel vehicles which again bring in billions upon billions of dollars per annum. As with the electronic cigarette industry, politicians only really took notice when the electric car market began to grow and environmentally friendly issues were more in the minds of voters.
If you take a step back from the tobacco/electronic cigarette debate and look at state/government budgets in pure financial terms, the ongoing reduction in tobacco cigarette sales is hitting them hard. The introduction of electronic cigarettes is set to seriously increase the decline in tobacco cigarette sales, currently averaging around 3.4% per annum since 2000 in the US – some experts believing it could hit 7% in the short-term. However, the justification for the ongoing taxation of tobacco products has always been the “additional healthcare costs” but is this relevant for electronic cigarettes?
The information vacuum
While information and research about electronic cigarettes is starting to emerge there is still something of an information vacuum and a need to relay the latest information and details to the general public. As a consequence, many politicians continue to talk down the electronic cigarette industry, regulators are “doing their bit for the public” while the vaping community is concerned that vaping products and electronic cigarettes will be taken away from them.
Over the last few months we have seen more information emerging in the public domain, we have seen a far more friendly worldwide press but there is still a lot further to go. It would appear that a number of US state authorities are urgently trying to push through a ban on electronic cigarettes with some others going in the opposite direction and proposing electronic cigarette taxes. You could argue that politicians are attempting to protect their tobacco tax income, they are looking to place as many hurdles and obstacles in the way of the electronic cigarette industry as they can, but is this really the case?
Taking A Balanced Approach
While it would be unfair to suggest that all politicians are biased in some shape or form against the electronic cigarette industry, the general consensus seems to be one of resistance. Time and time again politicians repeat as “fact” the notion that electronic cigarettes are a gateway to tobacco cigarettes despite the fact that the exact opposite would appear to be the case. It is this type of argument which gnaws away at public confidence in politicians and in many cases they could be doing themselves a major disservice in the medium to longer term. Even the most ardent of critics readily acknowledge that electronic cigarettes are at worst “less harmful” than their tobacco counterparts with some even suggesting they are 99% less harmful. These are two very extreme ends of the electronic cigarette debate spectrum and there is no doubt money is now coming into play.
In principle many electronic cigarette enthusiasts would probably accept a relatively mild tax in the medium to long-term. However, the problem remains that what begins as a very light tax and light regulatory regime can very quickly become overbearing and overpowering. Give politicians an inch and they will take a mile!
To learn more about Mark Benson and read more views from him on vaping, visit his site at OKCigs.co.uk.