SOURCE: http://news.heartland.org/newspaper-article/2015/01/09/indiana-lawmakers-propose-e-cigarette-regulations-taxes

Indiana Legislators Introduce Regulations and Taxes on ECigs

Bipartisan lawmakers from Indiana are facing the possibility of a tax increase on electronic cigarette sales, as well as correlating regulations increasing. State Representative Edward Clere and Charlie Brown are promoting the bill, with also being backed up by state Attorney General Greg Zoeller.

If the bill makes its way into legislature, it would include banning the use of e-cigs in all places where traditional tobacco cigarettes are already banned. Other regulations in the proposed bill would include packing requirements that must be found on the e-cig cartridges.

There would also be an added 24 percent tax on the total price of e-cigs and its’ supplies. This extra tax comes with the hope that would “stop the trend in its tracks,” said Zoeller.

The Benefits of the Proposal

“There is no rational public health justification for placing a sin tax on the sale of vapor products and electronic cigarettes. For years, anti-smoking activists have pushed for higher taxes on cigarettes by using the justification that they help smokers quit,” claims Heartland Institute research Greg Conley. “So why are these same activists trying to hike the price of a product of the free market that is proving to be extremely helpful for smokers looking to improve their lives?”

Conley also goes to say “Undoubtedly, taxes on vapor products will lead to cross-border and Internet sales. Many consumers in Indiana already buy their vapor products online out of convenience, or because they do not have a vape shop near their home. Excise taxes will just further drive business out of Indiana.”

“If public officials are unwilling to engage in honest dialogue about vapor products and electronic cigarettes, the best thing for public health is for them not to talk about the topic at all… There are over one million adult smokers in Indiana, and the last thing they need is misinformation on the hazards of products that could save their lives.”

Overall Research

In 2010, an paper announced by the National Bureau of Economic Research, Mcmaster University’s Canada Reseaarch Chair, Dr. Philip DeCicca, obtained data from the United States Census Bureau’s Current Population Survey to assess the correlation in consumers’ spending habits. DeCicca’s study showed the United States states’ sin taxes are exceptionally high, and prompts buyers to purchase tobacco from states with lower excise tax rates. Essentially, states could be losing money due to high taxes.

“It is pretty clear that cigarette taxes are higher than the optimal level, with most of the large increases coming in the last 10 years or so,” DiCicca analyzed. “I am not sure that they are, because it involves a lot of different margins and issues.  I tend to think that cigarette taxes are minimally effective, and public disapproval has driven the overall decline in smoking we have seen over time.”

He then added “The way cigarettes are taxed creates opportunities for arbitrage, just like there are opportunities for individuals or firms to move to lower-tax areas or areas with perceived better services.”