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Prop 56 Could Result In A Huge Tax On Vaping In California

By Matt McConnell

Monday October 10, 2016
california ecig tax
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Another ecig tax may be about to hit the US vaping community in the State of California. Whether or not there will be a tax depends on how the people of California vote on Proposition 56. If Prop 56 is voted into effect, the mandate will be to impose a $2.00 per pack tax on cigarettes and an “equivalent” on electronic cigarettes. How they will determine the equivalent we do not know at this time. Chances are that given the average regulator or bureaucrat’s knowledge of vaping, it is likely that they will not have much of a basis in understanding to even know where to begin.

The idea behind Prop 56, despite what critics say, is not a kick back to big insurance companies. They are very specific about how the money will be allocated. 82 percent of funds will go to Medi-Cal services. 11 percent will go to tobacco prevention, probably some to the CDPH which unfortunately slanders vaping. Five percent of the money will go towards towards research into cancer, heart and lung diseases, and other tobacco-related illnesses. The remaining two percent is slated to go towards school programs that focus on prevention.

Except for the CDPH getting money and the tax on vaping, this sounds pretty good. Smoking exacts massive healthcare costs to tax-payer funded medical coverage and it only makes sense that since smoking is significantly responsible, smoking also become a revenue stream to in some way cover some of the costs caused by tobacco. The problem is that once again vaping is being lumped in with smoking and that is a huge mistake.

Prop 56 Ecigarette Tax

electronic cigarettes taxes will apply to this guy vaping in a park

Normally, I automatically oppose any tax to electronic cigarettes. In my opinion, we need to keep vaping as accessible as possible to adult smokers. Ideally, Prop 56 would apply only to tobacco and cigarettes. By the same token, a tax to defray the health care costs imposed by smoking seems only reasonable.

There is a 56 million dollar campaign to defeat prop 56 that is being funded to the tune of $56 million with Altria alone picking up $30 million of the tab. The main line of the “No on 56″attack is that the bulk of the money raised by Prop 56 is going to “special interests that rig the system’. A popular campaign slogan this year. Now Big Tobacco’s interest is not in the tax on vapor products, they are fighting to keep the price of cigarettes low and without additional tax. The ‘Yes on 56’ campaign has less than half that amount of money with $10 coming from California Hospitals Assoc.

The question becomes will Prop 56 funds really got to special interests? I have studied this issue and, though no expert, I do believe that indeed the 82 percent going to Medi-Cal services will be going directly to health care for the people who are served by Medi-Cal, largely working poor people living below the poverty line. One of the many reasons this checks out is because during the California budget crisis of 2011, it was Medi-Cal that was hard hit by cuts. While Prop 56 is harmful to vaping, it is a net benefit to the fight to reduce tobacco harm.

We Assume The Worst In Regulators

In the current climate, government workers and regulators are under attack. We assume the worst in regulators almost without fail. I understand that well. Being an advocate for vaping I fight against overreach all the time. And many regulators are clueless and have very questionable motivations. I think few industries have experienced more of the dark side of bureaucratic regulation than vaping.

By the same token, there really are people doing an honest job on behalf of the people that they represent. I see both sides of the coin. With Prop 56 I do have huge concerns because I know that Stanton Glantz is someone regulators listen to and he is making it his mission to slander vaping and equate it to smoking. I also know that the vaping community will not be consulted and we are going to have to make a lot of noise before even being allowed to enter the conversation. Evaluating the machinations and motivations behind any proposal is always difficult and at the end of the day all we can do is draw our own conclusions.

There are some good core principles behind the aims of Proposition 56. There are also the unknowns specifically as it applies to vaping. Some are suggesting that the ecig tax could be as much as 70%. That would be an outrage and damaging to public health and I could never support that not could most vapers as I suspect. A reasonable tax on vaping that keeps the costs within reason is not out of line.

Vaping Is Not Smoking!

Ultimately, vape taxes are a symptom. They are a symptom of the fact that regulators and officials mistakenly associate vaping and smoking into the same category. This is where education is needed. We need to communicate with our officials and regulators to explain that vaping is not smoking. The vaping community needs to figure out a way to put as much daylight as possible between vaping and smoking.

It would be amazingly productive if regulators worked with vapers. For example, if vaping was exempt from Prop 56, I suspect that the vaping community would have no issue  backing Prop 56. That’s the sad thing about vapers and anti-smoking interests, we are missing doing great things as allies as opposed to being in constant opposition.

Vapers And Regulators Should Be On The Same Side

no on prop 56

As you can see the highest smoking rate in California is for people living below the poverty line. And I know that there is always a gut reaction that if you are in poverty what are you doing buying cigarettes? I get that. But its a reality and below the poverty line depression and other societal factors are morel likely to drive people to smoking. Well, people might be more discouraged from smoking if cigarettes cost more. There is some evidence that higher cigarette prices do discourage smoking, and now you know why Big Tobacco is willing to drop $60 million on the lobby effort with voters.

There are a number of reasons that Prop 56 could bring about a number of beneficial outcomes for Californians. Right off the bat we know that people need Medi-Cal and if Prop 56 fails the costs will be widely distributed among all tax payers as opposed to excising a healthy sum direct from the single product that does more to generate those costs than any other. Money for prevention and research is good, too. And if higher cigarette prices keep someone from smoking then it is worth it totally.

I am a California resident and I have to decide which way to go on this issue. I hope I have done a good job explaining why this is not an easy choice. I like a lot of what this measure could potentially accomplish but at the same time worry about the unknown consequences. Ultimately, it is those unknown factors that will lead me to not support Prop 56.

Despite The Good, I Have To Say No To Prop 56

say no to proposition 56

Big Tobacco calls Prop 56 a ‘special interest tax grab’. Of course they do. They are in fine form and tactically consistent with their entire history as an industry. It rubs me the wrong way that Big Tobacco is framing this argument the way that they are because I know that it is not true and all that they care about is selling more cigarettes. Do they care about the access to health care for the poorest among us fighting with a smoking addiction? What do you think? Did they care that California tax payers will pick up the costs to pay for the shortfall created by the horrible harm their products are responsible for? What do you think? I think we both would have the same answers to those questions.

So, I’m bothered by this. But I have to say no to Prop 56.

Because we do not know the outcome of what the final tax will be on vaping products, I just cannot support Prop 56. I am afraid of an onerous ecig tax that will discourage people from vapor and keep them stuck on cigarettes and that is a disastrous outcome. I support “No on 56” with some regret because there is so much potential being squandered in the fight against smoking because regulators, elected and appointed officials continue to irrationally conflate vaping with smoking.

Look, if regulators come to their senses and exempt vaping from Prop 56, I’ll go out and knock on doors tomorrow in favor of 56. The most overarching theme here is the missed opportunity due to ignorance. There’s no sense sugar coating it. Officials and regulators do not talk to vapers and it has created a chasm of ignorance that is only hurting the fight to reduce tobacco harm.

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