U.S. Congress considers tax on nicotine

The Ways and Means Committee of the U.S. House of Representatives will consider a bill tomorrow to introduce a federal excise tax on e-cigarettes. If approved, House Resolution 4742 would tax nicotine that has been “extracted, concentrated or synthesized”. Nicotine Replacement Therapies approved by the FDA are exempt from the tax under the proposed legislation.

The bill under review labels extracted nicotine as “Taxable Nicotine” and classifies it as a tobacco product along with cigars, cigarettes and roll-your-own tobacco. Oddly, the bill seeks a form of parity between the proposed rate of tax on the weight of nicotine and the specific amount of tax applied to 1000 cigarettes. In practice, the proposed tax would likely fall disproportionately higher on nicotine used in e-cigarettes and vapor products.

Variable concentrations

The concentration of nicotine found in vapor products varies considerably based on consumer preferences as well as the type of electronic device used to generate the aerosol. Disposable closed system devices tend to contain more highly concentrated nicotine solutions than mods with larger batteries. This is because their smaller batteries and less powerful atomizers produce tinier droplets of liquid nicotine for the user to inhale. Larger, more efficient mods produce bigger droplets and have less need for potent concentrations in order to satisfy the consumer’s craving for nicotine.

In simple terms, liquids of identical concentrations used in different devices may deliver vapors which have varying impacts on consumers’ nicotine urges. Those who prefer less efficient closed system products may find themselves paying a higher tax for the same volume of liquid than devotees of open systems products – so much for tax neutrality.

Public health impact

This approach to taxation may also have a negative impact on public health by raising the cost to smokers of switching to vapor products. Since smokers frequently experiment with simpler closed system products as they transition from tobacco to vaping, the tax currently under consideration would likely reduce the number of successful attempts to quit.

One wonders if the sponsors of this bill are taking advantage of the current national hysteria which has conflated the vaping of illicit THC oils which has pernicious consequences to health with the consumption of legitimate e-cigarette products which studies have shown to be at least 95% less harmful than smoking tobacco. And then there’s the money. With so many states now taxing e-cigarettes to offset declining tobacco tax revenues perhaps the Congress feels it is time to get its hands on some of the loot as well.