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Why Electronic Cigarette Taxes Don’t Work

Montgomery County e-cig tax falls 80% short of expectations

ROCKVILLE, Md. -- The electronic-cigarette tax passed in Maryland’s Montgomery County has fallen 75% to 85% short of the $1.5 million to $2.5 million tax revenue predicted when the measure was passed last May. As of Feb. 29, the tax had raised just $175,720, according to the Daily Caller News Foundation. Tom Hucker electronic cigarettes

Council member Tom Hucker (D) sponsored the 30% tax on the wholesale price of electronic cigarettes. Hucker argued failing to tax e-cigs was equivalent to subsidizing them, and the tax would raise much-needed education funding for the county. 

“I’m very proud that Montgomery County is in the forefront of national policy in this area,” he said when the measure passed.

Indeed, many states and counties proposed e-cig taxes in 2015, with the Tax Foundation reporting that four states, the District of Columbia and three local jurisdictions had imposed vapor taxes as of January 1.

Gregory Conley, president of the American Vaping Association, said the Montgomery Council and other legislatures failed to understand the mindset of vapers, resulting in the lackluster e-cig tax revenue generation.

“The County Commission’s desire for more tax revenue came together with a lack of drive on the part of the sponsors to actually study the market they were targeting,” Conley said in a statement to the Daily Caller. “These combined forces resulted in a revenue estimate that was wildly overestimated. The budget hole created by this tax underperforming will likely leave Montgomery County residents on the hook come tax time.”
 

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