We’re seeing it all over the U.S. right now. Local and State governments are turning to taxing vaping as a way to raise revenue and close budget gaps. Politicians are trying to make up for shortsighted spending overreaches from the past by slapping taxes on a new technology. The threat of this sort of policy is driving us from Washington and it’s already been implemented in Kansas.
The problem with the logic politicians are using to implement these policies is that, in the long-run, the vaping industry could actually end up making the government more money if it is left untaxed and allowed to grow. How so?
1. It Saves Tax Money on Healthcare
For every $10 spent on healthcare in the U.S., 90 cents of it is due to smoking cigarettes. That is an immense proportion for one nasty habit. In terms of total price, the CDC calculates a cost of $170 billion a year.
The numbers get worse when you adjust for only spending from government sponsored programs. According to their analysis the CDC says that “9.6 percent of Medicare spending, 15.2 percent of Medicaid spending and 32.8 percent of other government healthcare spending by sources such as the Veterans Affairs department, Tricare and the Indian Health Service, were attributable to smoking.”
But despite the obvious governmental costs associated with smoking, politicians are pushing ahead with plans to regulate the vaping industry. It doesn’t matter that this technology could hold extraordinary potential for people that want to quit; tax revenue is needed and it’s needed now. If they would only think in the long-run, they would realize that more money is saved by allowing the community to flourish.
2. It Generates Tax Revenue From Vaping Businesses
Wells Fargo has estimated that $3.5 billion in revenue will be produced by the vaping industry this year and that number is expected to grow to over $10 billion by 2017. That is a huge amount of growth in only two years and speaks to the obvious popularity and need for an effective alternative to cigarettes.
So why is this good for the government? Well, considering that the economy is still struggling to recover from the beating it took during the 2008 financial crisis, it would probably be a good idea to not stifle an industry that has shown promising growth even amidst economic turmoil. The government survives off of revenue from corporations and the individuals employed by them (more on that in a second) so promoting the vaping industry would seem like a no-brainer.
Unfortunately, $10 billion in revenue is still a drop in the bucket to the government. The regular tobacco industry generates around $500 billion in revenue yearly. Again, politicians are thinking in the short-term. They don’t care about what the vaping industry could become, they care about what it is now; a niche community that they think can be gouged for tax dollars.
3. It Promotes Higher Employment
Another by-product of promoting the vaping industry is higher employment. As demand grows for e-juice so does the demand in the economy for skilled workers knowledgeable about the industry. People who would have otherwise not had a job are being put to work at B&Ms, working online designing e-commerce websites, designing new hardware, or doing any number of new jobs that have been made possible by this new technology.
This is great for the economy because unemployment is one of the worst killers of growth. With high unemployment people aren’t able to contribute to the economy because their skilled labor is going to waste. Furthermore, having a large number of unemployed citizens is a draw on a nations welfare program. Less people working means more people needing food stamps, housing assistance, and healthcare assistance. By creating more jobs, the vaping industry is simultaneously strengthening the working base that drives the economy’s growth while reducing the need for governmental spending.
4. It Prevents Black Markets
Back in March a few other employees from MBV and I traveled down to the Washington State Senate for public hearings on House Bills 2211 and 1645 regarding the vaping industry. There was a great turnout from the community and a huge number of testimonials on how vaping had positively effected citizens’ lives. One of the best parts of the day was that, in his closing statements, committee chairman Chris Hurst (D-Enumclaw) mentioned that he was opposed to high taxes and an online ban on vaping products because it would promote a black market for untaxed vapor products.
Finally, a politician was getting it. Or so we thought.
Representative Hurst and the rest of the committee ended up approving revised versions of Bills 2211 and 1645 that removed taxes on vaping products and the ban online sales. But, within a week, the old bills were reintroduced with all regulations in-tact. The difference was, this time they went to committee’s that were closed to public comment. Apparently, someone in Olympia was dead set on having their taxes voted on without the opportunity for public opposition.
Most of you know how the rest of this story goes. While the bills have not yet been passed MBV has decided that Washington is not a State where a vaping company of our nature can operate. And that’s sad, not only because we love this State, but also because of what Representative Hurst warned of: vaping prohibition will simply cause a black market to form that is more dangerous than what politicians are trying to stop. This hurts the economy by generating revenue that is outside the traditional tax system and by clogging up the legal system with otherwise law-abiding citizens.
Of course, this war is not over. There is still time to reach out to legislators in Washington State and across the U.S. to let your voice be heard as a proponent of the vaping industry. CASAA offers outstanding information for politically-concerned vapers and the AVA does as well. Together we can make sure politicians understand the vaping industry is one worthy of support.
Something to think about:
In what other ways does the vaping industry help the economy?