Taxation of E-Liquid in the US

[Coastal Cowboy]

I originally posted this in the Newb forum in response to a post regarding Italy's proposed excise and VAT tax on e-cigs.

That OP is here.

http://www.e-cigarette-forum.com/fo...italy-decree-levies-58-5-tax-plus-21-vat.html

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Hmm. Just doing some math here.

Current US federal excise tax on cigarettes is $1.01. The average state tax is $1.53 (not counting local taxes), for a total tax rate in the US of about $2.54. If I remember the data correctly, the pre-tax retail cost of a single pack is about $2.50, so there is already an approximate 100% taxation rate on cigarettes in the US.

The average 10ml bottle of e-liquid (containing nicotine*) costs about $5.00. You can get a lower price/ml by buying 30+ ml bottles, but let's use the 10ml price of $5.00 as a point of reference.

If the US and various states imposed the same tax scheme on liquid that they do on cigarettes, one 10ml bottle would go from $5.00 to about $10.00. Various formulae can come into play here, such as increasing the quantity to get a discount and increasing the nic level to get more out of the purchase, something that could be will certainly be done to reduce consumer tax burden.

I'm neither for or against this. Just throwing it out there for discussion. Would a $10 bottle of your favorite liquid at $1/ml still be enough of a price impact to keep you in the market?

* Zero nicotine but still flavored juices would fall outside of this scheme. If it's just PG and or VG with flavors, taxing it under a tobacco product equivalent scheme would be an equal protection issue and would fail in federal court. So too would attempting to tax unflavored nicotine liquid, which has uses other than e-cig liquid manufacture.

 

[ZNinja]

DIY would go through the roof...

 

[Nacon]

This is going to be interesting. If it happens I know it'll encourage me to get more serious about DIY.

 

[VikingQueen]

At $1 a ml, well considering how much I'm vaping today (I've got some good flavors, don't judge!), it would be closing in on the monetary cost of cigarettes. I'd still stick with it, but I'd be sad. At $1.50 per ml, I'd have to get out of the game or *gasp* vape less.

 

[murphyramone]

I think i would go semi diy. Id but the 0 nic juices and add the nic to them myself(and taper down my nic content more rapidly)

 

[patkin]

Unless buying bottom-priced (mostly unvapable for me) or Chinese juices, most vendors are charging $1.00 or more per ml for the 10ml size now. So a more accurate tax picture would be $20.00 for a 10ml bottle. Should something like that happen, I would buy extremely high nic for a limited number of puffs per day and fill in between with 0 nic or semi-DIY by mixing the two. Of course, that is if its not taxed by percentage of nic. That or, honestly, I might smoke five or six cigs per day and fill in with 0/low nic vaping. Or maybe just go the route of an Njoy King Bold a few times a day. Frankly, pre-mixed juices are way, way, overpriced as most DIYers know and should such an exorbitant increase take place, I would expect vendors to lower their profits.

 

[Orb Skewer]

I'm going to throw in my ususal little 'curve ball' here
My prediction is that the next 'sea change' in vaping/escaping tobacco use, will happen when more and more people realise how non addictive nicotine really is.
Nic free is the future-
Otherwise, they still own you.

 

[pcrdude]

"They" said they were increasing the taxes on cigarettes to discourage smoking (sin tax).

If ecigs are a healthier alternative, "they" should increase the cigarette tax AGAIN, and add no extra taxes to eCig liquids.

I know, I know pipe (PV) dream.....

 

[bikerbeagle]

For me, purchasing pre-filled flavored juice at anything over $7.20 / 10ml would be my breaking point (although I have before) ...but, to be honest, I'll be DIYing it the minute the government makes the decision to tax it. It's not about the amount, I'd gladly pay $20 / 10ml if that's just what juice cost to produce, but I won't pay more just because our government is greedy and incompetent.

 

[the_vape_nerd]

you people who think bottled juice is still going to be sold after fda regulation are in for a big surprise

the push from big tobacco is going to be to rid the market of bottled juice...they are going to put this stuff in tamper proof cartomizers in the name of "protecting the children"...the only way you will be able to get any nicotine liquid is inside one of these regulated cartomizers or to get a suppliers license which will be very costly

so the idea that you can just DIY is a wrong assumption

as to a tax, the fda has no authority to tax a thing, only congress can and im here to tell you that they will tax the stuff at or near the current cigarette tax

what we need is a method of extracting our own nic...i know there have been posts about this but its very tedious....its not a simple as dropping a tabacco leaf into some PG...it requires some knowledge of chemistry and possible the erection of a still

 

[Coastal Cowboy]

Unless buying bottom-priced (mostly unvapable for me) or Chinese juices, most vendors are charging $1.00 or more per ml for the 10ml size now. So a more accurate tax picture would be $20.00 for a 10ml bottle. Should something like that happen, I would buy extremely high nic for a limited number of puffs per day and fill in between with 0 nic or semi-DIY by mixing the two. Of course, that is if its not taxed by percentage of nic. That or, honestly, I might smoke five or six cigs per day and fill in with 0/low nic vaping. Or maybe just go the route of an Njoy King Bold a few times a day. Frankly, pre-mixed juices are way, way, overpriced as most DIYers know and should such an exorbitant increase take place, I would expect vendors to lower their profits.

Some higher end vendors are, but there are some excellent vendors who sell 10ml bottles for $5 to $6. LiteCigs and MBV are two good examples of vendors with acceptable, popular juices in the price range of my example. I realize that for other price ranges, the decision may change.

I also agree that the DIY arena would take off.

 

[Glen Snyder]

I've already prepared myself for future regulation and taxation though education. Knowing how the devices function and being handy will cover the equipment and I got my initial DIY supplies over a month ago and so far nothing I've mixed is unvapable or even unpleasant.

Besides, by the time any such tax or regulation comes down I'll have a ProVari. I've heard tell that just to gaze upon it's magnificence will fulfill all your vaping desires. So suck it Uncle Sam

 

[patkin]

Some higher end vendors are, but there are some excellent vendors who sell 10ml bottles for $5 to $6. LiteCigs and MBV are two good examples of vendors with acceptable, popular juices in the price range of my example. I realize that for other price ranges, the decision may change.

I also agree that the DIY arena would take off.

If you look at P Busardo's charts, MBV is a rarity price-wise and was actually the one I was thinking of.. unvapable for me after $150.00 in juices from there. I already buy Dekang at Litecigusa and the Chinese I was already thinking of also. LOL I already DIY also but am saving my supplies for possible future needs and buying pre-mixed while they last or are feasible. But, I do agree with the thinking that the days of bottled juices will be over when taxation hits.

 

[SissySpike]

Im sure its coming sooner or later. Our government is a huge money eating machine its 18 trillion dollars in debt that its not even trying to settle. If for no other reason as it looses revenue from cigarettes it will one day turn its all seeing collection eye our way. We have our top corporations operating from government hand outs and a ever growing class of welfare dependance. Its all gotta be funded from some place. Rest assured until the bubble pops and we are going threw a collapse like Russia did the politicians will tax all they can to try to tread water.

The sad part is the collapse is coming no matter what its inevitable its a mathematical certainty. But our fearless leaders chose to make it a hard painful crash, rather than a controlled decent.

 

[iceman68]

* Zero nicotine but still flavored juices would fall outside of this scheme. If it's just PG and or VG with flavors, taxing it under a tobacco product equivalent scheme would be an equal protection issue and would fail in federal court. So too would attempting to tax unflavored nicotine liquid, which has uses other than e-cig liquid manufacture.

When these tax schemes come to pass (I say "when" because I'm sure it's going to happen), I will surely focus more on DIY liquids. Paying $10-$20 for a 10ml bottle is just outrageous IMO. One of the reasons I gave up smoking was because of the exorbitant taxes. To turn around and pay those prices and taxes again for e-liquid is unacceptable.

Though I'm wondering about your assertion that zero nic flavored liquid and unflavored nic would fall beyond the reach of these new measures. I really hope you are correct but my cynicism leads me to believe that these things will surely also be regulated/restricted/taxed in some fashion. Otherwise people will just buy the flavored liquid and nic and mix it themselves, which would basically circumvent the new restriction. They won't let us get away with that, will they?

 

[HDVaper]

This is all just way too depressing for me...let's change the subject because I agree the "gubmint" can and will do ANYTHING they want and we have no recourse. It's really sad that we let them get us in the position that we're in now and didn't fight back!

 

[Madison76]

At the state level the taxation push is already on the move. Oklahoma, California and South Carolina to name a few. AND it's being pushed by BT. Now, the rate of taxation is much lower than that of a regular smoke. I believe the template legislation from BT is $.05 per mL (not to exceed 10% of the rate on a pack of smokes). BT says they are just getting out in front of the inevitable and they are securing a low rate to protect the industry.

Problems are multiple:

1) For a 1mL cartridge sold like BT wants - that is fine
2) It becomes exponential as we vapors don't just buy liquid like that.
3) Once the legislation is there, you just provided the path to keep raising the tax
4) It will forever categorize vaping in the same code as tobacco and smoking
5) The regulatory framework in the legislation will also push every vape vendor out of business (by design)
6) This will be in addition to whatever the heck the FDA does.

Anyway, it's here. It's in the state legislatures now.

To clarify, it's Reynolds America that's pushing this now. The other BTs are currently opposing, but who knows where they will be next year.

 

[Rickajho]

Look, I'm still of the opinion that this whole thing - deeming, taxing... - beyond a State sales tax as assessed on any other taxable non non-taxable (political crap forces me to phrase things that way) - will go nowhere. It's simply too complicated (there I go again) for our gubbermint mindset to handle.

First you have that whole "tobacco" versus "what the hell is that?" problem. Tobacco - even something as complicated as a cigarette - well, Washington can figure it out. If it contains tobacco - tax it. When you get to something as "complicated" as roll your own stuff - if it contains tobacco (you know... tobacco), and it's a part that you stick the tobacco in that serves no other purpose - tax it.

The whole problem that keeps tripping everything up - from the FDA, regulation and taxation - is the complex (for Washington) matter of "what the hell is it?"

"It's tobacco." Well, duh - no, it isn't.

"It's nicotine." And so is all that stuff you already approve - like Nic-O-Gum & prescription inhalers. And when it's in pest control products and other stuff. So what?

"It's medicine." Perhaps, but that's a stretch. If it's really that bad then why did you let Nic-O-Gum et al slip into the realm of non-prescription OTC products?

"It's dangerous." Still waiting on those thousand of lawsuits, from people getting harmed by vaping. (Stupid doesn't count. Anyone can blow up a battery if you "Jackass" it enough.)

Then everything collapses under the heavy burden of Washington being unable to parse out the parts, so to speak. They don't know what to do with:

A battery is just a battery - except when it's in an e-cigarette. Take your 18650 battery outta your mod, stick it in your flashlight, and the tax man's head explodes.

Propylene Glycol is regulated and outrageously taxed - except when it's not in an e-cigarette. They can't level the playing field and just "tax it all" or any and every other industry that uses PG would be in a massive Lobbying hissy fit. Including and especially big pharma. Will Washington propose regulation and taxes based on intent? If you declare your purchase of VG in a CVS is for vaping will you pay more in taxes, but not if you say it's for baking? Gimme a break...

And polyfill and silica wick and electronic components and nichrome wire and on and on and... It's an e-cig "thing" - except when it isn't.

The problem Washington cannot overcome is that "e-cig" is actually more broad concept than narrowly defined execution. Put all these parts together and you end up with an e-cig. But all these individual parts make DC's head explode.

Oh... forgot about that whole "What the hell is it if there is zero nicotine in it?" problem they can't wrap their heads around too. Yet another concept versus execution brain fart for the Feds.

Gonna go vape some and not worry about our gubbermint getting something done. They are really good at accomplishing pretty much nothing these days.

 

[IrishUpstart]

I think you nailed it, rick.

 

[Gerick]

They did the same crap here in NYC with the water. Said it would help curve excess water usage (waste) if they taxed it.

Now water usage is way down and the DB's raise it every chance they get. It was never really about the water usage..just another scheme to get your hard earned $. We never get droughts here (very very very rare) , but at the time when they first started this crap they went on and on about the upstate reservoirs. Now you never hear a peep about it or droughts.

If anything..NYS should be lowering the water taxes now that water usage has decreased tons.


THE GOVERMENT DOESN'T CARE ABOUT YOUR HEALTH ..IT'S ALL ONE BIG LIE !

Do you know the goverment has hired focus groups to see what amount of Tax would cause a revolt among the people..I'm not kidding. Look it up.

What they did find out is if they go after small groups of people (Sin Tax ?) they could get away with it without a big backlash, by making theses groups seem like demons who are also harming other people.

States are losing cig tax $ (people quitting and many taking up E-cigs) and they can't have that and lose all that tax revenue. Even if the tobacco companies didn't get involved the goverment will
still see the $ lost from people quitting and still tax us E-cig vapers.

It has nothing to do with them caring about your health ,but they will talk about healthcare premiums
and all that jazz.

You can explain the facts to the goverment and they still won't give a crap (they will pretend ) and
will still find some kind of loophole in the law to Tax you or just put it off until later..eventually it will come.

It's all about the $ so they can build some bullcrap project in their state in order to get re-elected....period !

"They" said they were increasing the taxes on cigarettes to discourage smoking (sin tax).

If ecigs are a healthier alternative, "they" should increase the cigarette tax AGAIN, and add no extra taxes to eCig liquids.

I know, I know pipe (PV) dream.....