Oregon E-Cig Tax Smokes Revenue Projections by 300%

In its quarterly revenue forecast Oregon state economists released last week is an eye-popping number: revenues from a new tax on nicotine-based e-cigarettes and vaping products.

“Inhalant delivery [vaping] revenues, a new tax in 2021, continue to come in significantly above initial expectations,” the economists wrote. “Over the first year of the tax, actual collections have been three times as large as expected.”

Prior to 2020, the state didn’t collect any taxes on e-cigarettes.

That changed with Measure 108 in 2020 that included a suite of new policies aimed at reducing the harmful effects of tobacco use—most notably a $2 tax increase on every pack of smokes, according to Willamette Week.

The measure, which passed 66% to 34%, also included a tax of 65% of the wholesale price of vaping products.

In October 2020, right before the general election, the Legislative Revenue Office prepared an estimate of how much the new vape tax would raise and estimated revenues to be an estimated $10 million a year.

In 2021, the first full year of collections, the state took in nearly $30 million.

It’s not unusual for projected revenues from a new tax to be significantly low, especially if they deal with new products such as vapes or newly legal products such as recreational cannabis, which also significantly overperformed in the early years.