Oregon Considers a New Tax on E-Cigarettes

Oregon lawmakers are debating whether to include e-cigarettes in the state tobacco tax. Despite the fact that e-cigs are actually tobacco-free, the Oregon Department of Revenue is still considering whether vaping is a form of tobacco consumption. If so, then e-cigarettes would be subject to the state’s current tobacco tax.

The topic was heavily debated during a joint meeting of the Interim Revenue Committee this week. Deanna Mack spoke out as the Oregon Revenue Department’s policy and legislative coordinator. She told members of the meeting that the Oregon law was clear on tobacco taxation. In order for a product to be subject to this tax, it has to contain some form of tobacco. This would exempt e-cigarettes, as they are tobacco-free. However, Mack mentioned that e-cigs do contain nicotine, which is basically derived from tobacco plants. That is where things get a little confusing.

Even if the nicotine content was enough to make e-cigs subject to the tax, there is still a lot of gray area to consider. For instance, what about the e-liquids and ecig cartridges that are nicotine free? Would they also be subject to the same tobacco taxation? Surely that wouldn’t be justifiable.

Mack suggested that Oregon lawmakers hold off on any judiciary ruling until they know more about e-cigarettes. She pointed out that Minnesota has started taxing e-cigarettes as tobacco products and is also including them in products that require a 35 percent health impact fee. In Minnesota, the tax is based only on the cartridge value rather than on the price of the entire e-cigarette. Mack said that Minnesota’s legislation could be a good example to consider. She also encouraged the lawmakers to consider emerging research about the safety of e-cigarettes.

As of today, Oregon is taxing analog cigarettes at $1.18 per pack. Senator Ginny Burdick questioned Mack’s statements on the origins of nicotine, asking whether the nicotine in e-liquids was synthetically created or derived from actual tobacco plants. Mack insisted that the nicotine was coming from tobacco plants, not from laboratories.

If Oregon follows federal examples, e-cigs would not be subject to the tax. United States tobacco laws do not include e-cigarettes, however the FDA has stated that they want to institute new e-cig regulations in the future. House Committee Chairman Phil Barnhart voiced his concerns about the potential appeal of e-cigarettes among children and teenagers. Barnhart closed out the meeting by encouraging his fellow lawmakers to consider new measures to protect the health of Oregon residents, insisting that the growing popularity of e-cigs made it necessary to take action.

Interestingly, Oregon is one of only 12 states in America that have not increased taxes on cigarettes in the past decade. Its current cigarette tax of $1.18 per pack is notably below the national average of $1.53. With this in mind, it might be wise for Oregon lawmakers to consider increasing the tobacco cigarette tax first before they target tobacco-free electronic cigarettes.

Do you think e-cigarettes should be taxed as tobacco products? How would you address Oregon lawmakers to defend your position?

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Author Focus: David Fitchburg
David is a 5 year vet of the e-cig scene. He started smoking in his late teens, his habit got pretty bad and the birth of his daughter really made him think that he should consider quitting tobacco. He tried everything with little success. Then in 2008 he discovered e-cigarettes, started vaping and has never looked back. Read Full Profile >