Poor Tax Design in Alaska Vapor Tax Proposal

Date:

A proposal to introduce a wholesale tax on vapor products in Alaska could make switching from combustible tobacco products very expensive for smokers.

If enacted, HB 110 (SB 45) would, among other things, impose a 75 percent wholesale tax on nicotine vapor products (including components)—a rate comparable to the rate on other tobacco products and cigarettes.

Such a steep tax would markedly increase vapor products retail prices, which could limit the number of smokers that switch.

While excise taxes on both cigarettes and vapor products can be a legitimate way to recoup some societal costs associated with nicotine consumption, it is hard to justify equal tax treatment between vapor products and combustible tobacco. Vaping is unlikely to be harmless, but the consensus is that vapor products are significantly less harmful than traditional combustible tobacco products. Public Health England, an agency of the English Ministry for Health, concluded that vapor products are 95 percent less harmful than cigarettes.

Read full article here.

Ulrik Boesen – Tax Foundation – 2022-01-07.

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