The amendment would increase the tax rate on cigarettes from $0.30 per pack to $0.60 per pack, and would also double the tax on other tobacco products, including moist snuff and loose leaf.

The legislation would also apply a new tax to components of vapor products, and would tax nicotine-containing e-liquid at a rate of $0.066 per fluid milliliter.

Cigarette taxes are highly regressive and disproportionately impact lower-income persons. A Cato Journal article found from “2010 to 2011, smokers earning less than $30,000 per year spent 14.2 percent of their household income on cigarettes.” Smokers who earned $30,000 to $59,999 spent 4.3 percent, and those earning more than $60,000 spent just 2 percent of their income on cigarettes. 

Further, cigarette taxes are unreliable sources of revenue. The National Taxpayers Union Foundation found from 2001 to 2011, “revenue projections were met in only 29 of 101 cases where cigarette/tobacco taxes were increased.” 

Pew Charitable Trusts revealed a decline in cigarette consumption caused cigarette tax revenue “to drop by an average of about 1 percent across all states from 2008 to 2016.”

Funds generated by the proposed tax would be deposited into the Virginia Health Care Fund, which, in 2018, diverted the funds to the Commonwealth’s Medicaid program. Virginia lawmakers should be aware that the use of e-cigarettes can actually help reduce the Old Dominion State’s Medicaid burden.

• State Budget Solutions estimated Medicaid savings could have amounted to $48 billion in 2012 had smokers enrolled in Medicaid switched to e-cigarettes.

• In another analysis of Medicaid recipients switching to e-cigarettes, R Street estimated savings “will be approximately $2.8 billion per 1 percent of [Medicaid] enrollees” over the next 25 years.

Deeply problematic with the proposed excise tax on vapor products is that the proposed rate disproportionately impacts different types of vaping devices

Although lawmakers may feel that a tax of $0.066 is relatively low, later-generation open-system “mods” are disproportionately affected.

• For example, a $0.066 tax on a 120-milligram bottle of nicotine-containing e-liquid would amount to a total tax of $7.92, but a pod system containing 0.5 milligrams of nicotine would only be subject to a $0.033 tax per pod.

Consumers can avoid the tax by adding their own nicotine to e-liquid solutions. One company that sells a “concentrated nicotine additive” advertises its product by stating “Don’t lose business because of outrageous nicotine taxes.” In essence, an adult consumer can purchase e-liquids with zero nicotine and only pay a tax on a 1 milliliter packet used in any size of e-liquid.