The answer to that depends on how you define "government". The clients of the FDA, i.e. Pharma, stands to lose a lot of money if people adopt vaping instead of their patches and poisons. The FDA has already demonstrated their desire to squash e-cigs. Classifiying them as drugs would be the next best thing to an outright ban. Either kill them or hand them over to their clients. That was their objective.
Local and state bureaucrats wouldn't mind if e-cigs were outlawed because they're not sure the revenue from e-cig taxes will make up for the lost revenue from cigarette taxes. When calculating the tax rates to be applied to e-cigs, they'll attempt to achieve an equivalence. The tobacco lobby will stand by to assist them in these calculations, just as they did when tax rates were calculated for bulk RYO tobacco.
The FDA would love to make them illegal. They can't do it of course, in light of recent court rulings. But the fact that they can't stop people from vaping doesn't enter into the calculus. They can't stop people from doing a lot of things that are illegal even though they could be taxed and regulated if they were legal.
Fact is, if e-cigs were made illegal, a lot of people would go back to analogs. Probably half of the current vapers would revert to analogs. More importantly, the number of new vapers would diminish greatly. The FDA, who has the real power to cripple the e-cig market, is not necessarily concerned with tax revenue. Their concern is the fiscal health of their clients in the industries they are supposedly regulating, the same industries that provide them with the bulk of their revenue.
Consider this: Prior to 1937, that plant that can't be mentioned was legal. It was made illegal because of the ambitions of certain government bureaucrats. These bureaucrats wouldn't have been able to accomplish this without the cooperation of several industries that were threatened by this plant, notably the timber, paper (W.R. Hearst) and cotton industries. No thought was given to the costs of enforcement. No thought was given to the potential of tax revenue. Private corporate interests saw it as a threat and the government responded to protect those interests. Today, the corporate interests are even stronger and more varied, including a massive multi-billion dollar testing industry, rehab industry and prison industry. Consequently government will NEVER reverse course, regardless of any potential tax revenue and regardless of the potential to save billions of dollars in enforcement, judicial and imprisonment costs.