Usually the way these taxes are computed is relative to the wholesale price. However a comparison w/ cigarettes is complicated, because one also has to take into account state minimum price laws - these put a floor under what the wholesaler can charge the retailer, and what the retailer can charge the customer. As a practical matter, the base (wholesaler) costs of cigarettes is about $2-3 per pack. Jersey's take is about 100% of that cost. (Average price is around $8.50-$9.)
I think we can safely assume that
vaping taxes will begin where WA has started (75% of wholesale) and probably crest to several times that amount. I believe 75% of NYC's cigarettes are now black market, and a story I covered the other day in Jonathan Turley's blog sas that WA's up to the 40% level.
There's another interesting problem with taxation. Since cigarette smokers are probably more reliable sources of long-term revenue, it makes sense to tax high-% nic juice prohibitively in order to reduce the likelihood of losing cigarette tax revenues.
At the same time, if the tax on low-% juice is too high, then you run the risk of having some vapers switch to 0% + NRT. 0% is hard to control, unless you want to start restricting water-soluable flavors and PG/VG. That's a huge regulatory effort.
Ideally (from the standpoint of revenue, anyway), NRT needs to be taxed, too. Preferably this should be levelled against BP, which is more politically acceptable.
Smokers and vapers can serve as excellent potential cash cows for governments. But the politicians have to be clever about it.
Ideally,
vaping s/b banned, high taxes s/b levelled on both analogs and NRTs, plus a private police force s/b incentivized to bust black marketeers who sell cigarettes and bogus NRTs. Long mandatory prison sentences could help to bolster private incarceration firms which could generate both jobs and tax revenue.
When I say "ideally," I mean (of course) from a reveue-maximization standpoint.
(Or Necromonicon, if you know what I mean ;-)
