California to Propose Higher Vapor Taxes

When Governor Gavin Newsom submits his revised budget proposal on Thursday, it will include a vapor tax increase. California currently taxes vapor products at 59.27 percent of wholesale value, but the proposal would impose an additional tax at a rate of $2 for each 40 milligrams of nicotine in the product.

The tax would take effect January 1, 2021 and is forecasted to raise $32 million in FY 2021. Collections would be allocated to administration, enforcement, youth prevention, and health care workforce programs. The budget summary also stipulates that the governor supports a statewide ban on all flavored nicotine products (including menthol cigarettes), according to an article on taxfoundation.org.

The impetus for this proposal is increased youth vaping in the state. A nationwide survey of high schoolers, published in the fall of 2019, found that 27.5 percent of students had vaped at least once in the prior 30 days, though only 10 percent of students were considered regular users (defined as vaping 20 days out the prior 30). While youth uptake is a very real concern which deserves the public’s attention, punitive level taxes and outright bans could impede historically high smoking cessation rates.

California is the latest state to try to increase vapor taxes. This year, Kentucky, Utah, Virginia, and Wyoming have already passed increases to vapor taxes, which means 25 states and the District of Columbia now tax vapor products.