On behalf of the members of the National Taxpayers Union (NTU), we strongly urge all members of the House Finance Committee to oppose House Bill 2211, sponsored by Representatives Pollet, Ryu, McBride, Cody, Robinson, and Gregersen. This legislation would impose a 60 percent excise tax on e-cigarettes and other vapor products and create new regulations on businesses that sell or distribute the products. HB 2211 would harm not only small businesses, but also public health by discouraging the use of a tobacco-free alternative to smoking.
Before implementing this 60 percent tax, lawmakers should consider the make-up of an e-cigarette. The main ingredients that produce the water vapor—propylene glycol and glycerin—are considered harmless by the FDA and can be found in everything from toothpaste and fog machines to foods and cosmetics. Such products contain no tobacco, and a study by Dr. Joel Nitzkin of the R Street Institute found that e-cigarettes can actually reduce the risk of tobacco-related deaths or illnesses by 98 percent or more. By implementing a tax rate of 60 percent, HB 2211 would discourage the use of an option that can save lives.
Small businesses would also be negatively impacted by the unfair tax burden of HB 2211. The e-cigarette stores opening up throughout Washington (as well as existing establishments stocking them) would be hit hardest, as consumers are likely to avoid the 60 percent tax by purchasing from out-of-state vendors over the Internet. As a result, policymakers cannot easily predict the consequences for revenues by effectively punishing sales of a new product that can be purchased through other means. Will the anticipated revenues actually materialize? This is an important question, based on past history of other so-called “sin” tax increases, which fell far short of projections, resulting in budget shortfalls. In addition, HB 2211 would enact a new regulatory regime for vapor product distributors and sellers with new licensing and record-keeping requirements that could prove costly – especially to small businesses.
Based on the current research surrounding smoking, it is clear that e-cigarettes can be a helpful tool to reduce the harm of smoking, and not a gateway product. For lawmakers genuinely concerned about public health, the answer is clear: vote “no” on HB 2211. Taxpayers and small businesses throughout Washington are counting on you.
Executive Vice President