Proposition EE would tax nicotine from all sides, adding to cigarette taxes, taxing wholesalers and for the first time taxing vaping. (Chewing tobacco is targeted as well.) Imaginatively, the proposition would set a minimum price on cigarettes, adding to tax revenue and likely discouraging use.
If this passes, it will make nicotine use much more expensive. Expect to see a 6.5-cent tax on each cigarette until mid-2024, then an increase to 8 cents and then 10 cents. There will be an inventory tax at the wholesale nicotine level, and out-of-state distributors of nicotine products will be taxed. Until mid-2024, manufacturers would have to charge a minimum of $7 per 20-cigarette pack, or $70 a carton. After, that would increase to $7.50 and $75.
Manufacturers would enjoy the required higher price, but would the sales volume decline? We haven’t seen the data.
Sin taxes have always been a balance between generating tax revenue for good causes, discouraging use and reducing the number of users. There is no doubt that vaping should be added to the list of nicotine taxes; especially with its flavoring, it appeals to young users. Let’s discourage that demographic.
Revenue from the added and new taxes will go to public schools, including free preschool programs, and to programs that reduce nicotine use. First-year tax revenue is expected to be $175 million, increasing to $275 million by 2025.
We expect there still will be nicotine users, but fewer.
Vote Yes on Prop. EE.
Editor’s note: The Herald incorrectly said first-year tax revenue would be $300,000 in an earlier version of this editorial.