Despite a long history in the tobacco business, years ago Kentucky officially conceded that tobacco use has adverse public health implications, and lawmakers adopted an approach to mitigate the risks. While understanding that taxes can serve as an incentive to better behavior, they aimed to use tax policy to nudge Kentuckians toward less dangerous practices.
The Kentucky General Assembly even ratified their means of affecting change and declared : “…the General Assembly acknowledges that some in the public health community recognize that tobacco harm reduction should be a complementary public health strategy regarding tobacco products. Taxing tobacco products according to relative risk is a rational tax policy and may well serve the public health goal of reducing smoking-related mortality and morbidity and lowering health care costs associated with tobacco-related disease.”
In spite of this declaration, Kentucky looks poised to disregard it and disproportionately levy taxes on reduced-harm products, like e-cigarettes, which will ultimately undermine public health goals.
Temporarily desperate for additional revenue, the legislature passed a one-year budget last week, which levies about $58 million in new taxes. One of these was an excise tax on e-cigarette products —including a $1.50 per vapor cartridge tax—and this poses major problems.
Kentucky’s existing law asserts that tobacco taxes ought to be based on risk and should complement a tobacco harm reduction strategy, but the tax runs contrary to this. First, e-cigarettes are less harmful than combustible cigarettes. Indeed, Public Health England stated that they are 95 less dangerous , and they are the number one tool  Americans use to quit smoking.
Given that e-cigarettes are a better option, why would the Legislature raise taxes to $1.50 per cartridge when taxes on combustible cigarettes are lower at $1.10 per pack ? This only serves to discourage individuals from switching to the less harmful e-cigarettes or trying them as a cessation method.
The second problem with this tax is that all seven states surrounding  Kentucky have either no excise tax or would have a much-reduced tax on many e-cigarette products compared to the proposal on Governor Beshear’s desk. Relative tax parity is important. Otherwise, the disparity will drive those who live near the border to spend their money out of state, hurting the state’s tax collection and small businesses. Meanwhile, those in more central parts of the state will likely stick with combustible cigarettes rather than switch to vapor products.
If there is anything about the current coronavirus pandemic that is clear, it is that when public health concerns are ignored, they will often come back to haunt you. This appears to be true for states, countries and of course their citizens. Many of the regulations have been justified by supposed health and safety considerations, but in reality, they have no justifiable scientific basis of support.
Research into e-cigarettes and smoking cessation products, on the other hand, is robust at this point, and vaping cannot be ignored as a recognized tool to improve public health. Except for children, where prohibition is absolutely imperative, vaping is still considered by experts to be worthy of separate and less severe regulation, including taxation, by the government based on health and wellness considerations.
Passing a state budget, particularly in a state like Kentucky in which the legislative branch only meets a few days every year, is a delicate trick of packaging needs, interests and votes. Although there is a democratic amendment process, in the end it’s a take it or leave it proposition. Even so, there is time to reconsider the tax and put in place measures that will help the General Assembly balance the budget while also promoting harm reduction.
- “and declared”: https://codes.findlaw.com/ky/title-xi-revenue-and-taxation/ky-rev-st-sect-138-140.html
- “e-cigarette products”: https://apps.legislature.ky.gov/record/20rs/hb351.html
- “95 less dangerous”: https://www.gov.uk/government/publications/e-cigarettes-and-heated-tobacco-products-evidence-review/evidence-review-of-e-cigarettes-and-heated-tobacco-products-2018-executive-summary
- “number one tool”: https://www.bmj.com/content/358/bmj.j3262
- “$1.10 per pack”: https://www.lanereport.com/100424/2018/05/kentucky-cigarette-tax-to-rise-by-50-cents-per-pack-july-1/
- “states surrounding”: https://www.ncsl.org/research/fiscal-policy/electronic-cigarette-taxation.aspx