Arizona Lawmakers Tax To Alleviate Budget Deficit

Arizona lawmakers are considering taxes on electronic cigarettes as a way to help cover a $1 billion budget shortfall, the Arizona Capitol Times reported.

“It’s one option of many that we should look at at the Legislature,” said state Democratic Rep. Stefanie Mach of Tucson, who serves on the House Appropriations Committee. “It certainly isn’t going to come close to the amount of money that we need to make up the deficit, but any little bit helps.”

Some legislators are lighting up at the idea of taxing e-cigarettes to cover a huge deficit expected by fiscal year 2017, but how to regulate the devices has been a source of debate.

Legislators in dozens of states last year were faced with bills related to electronic cigarettes. Two states have already enacted “sin taxes” on them, according to the National Conference of State Legislatures. On the federal level, the Food and Drug Administration has struggled since 2011 to implement rules on how to categorize and regulate them as well as liquid nicotine.

Republican Rep. John Kavanagh, of Fountain Hills, said taxing e-cigarettes could discourage people from using them in an effort to quit smoking.

“The e-cigarettes, I am told, are not nearly as damaging to the body as tobacco is, and part of the reasoning for the tobacco tax is to compensate society for the additional costs in medical care that smokers cause,” said Kavanagh, who also serves on the House Appropriations Committee and running for a Senate seat.

The financial impact for Arizona from e-cigarette taxes is difficult to determine since proposals vary and cigarettes have about $2 in additional taxes per pack.

Arizona so far hasn’t enforced many restrictions on the electronic devices. Last year, the state made it illegal to sell them to minors. But Attorney General Tom Horne recently said e-cigarettes do not fall under the Smoke Free Arizona Act. Thus, patrons can smoke them inside restaurants, bars and other public places. However, cities such as Tempe have banned them.

The battery-powered devices heat liquid nicotine and create a vapor that the user can inhale. They are available at most convenience stores and “vape shops.”

Ben Denny, who works at a downtown Phoenix vape shop called Butt Out, said the industry would be open to some reasonable taxes but not to the same degree as cigarettes. The growing e-cigarette community would likely fight any legislation that advocated otherwise.

“Nobody serious is even getting close to claiming that (e-cigarettes) do similar harm (as smoking tobacco), so by attempting to tax them the same way, lawmakers are making a claim nobody else is making. And really, they’re just saying they want to bring in more money,” Denny said.