Several states are considering introducing or increasing taxes on vapor products to make up declining tax revenue from traditional tobacco products or to fill budget holes in the wake of the coronavirus pandemic.
However, lawmakers should approach the issue carefully because flawed excise tax design on vapor products could drive consumers back to more harmful combustible products like cigarettes.
Since vaping entered the market in the mid-2000s, it has grown into a well-established product category and a viable alternative to smokers. So far, 28 states and the District of Columbia have imposed an excise tax on vaping products. Additionally, the federal government is likely to impose a tax on vaping products in the near future.
While vapor taxes may represent an untapped revenue source for states that have yet to impose an excise tax, substantial revenue is unlikely in the short term.
This week’s map shows where state vapor taxes stand as of January 1.
Janelle Cammenga – Tax Foundation – 2021-04-07.
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