The Georgia General Assembly has been weighing tax refund proposals that are sure to receive plaudits from voters. The state budget includes a plan to provide a $1 billion dollar tax rebate to homeowners, and HB 162 would provide refunds of $250 to $500 to Georgians who paid income tax.
Given that Georgia has a Republican state government trifecta — meaning that the tax-averse GOP controls the governor’s office, House, and Senate — tax refunds shouldn’t come as a surprise, and it makes sense. Even after filling the state’s rainy day fund to the legal limit, Georgia ended the 2022 fiscal year with a $6.6 billion surplus.
Clearly, Georgia has enjoyed some good financial stewardship. However, despite the influx of revenue and planned tax refunds, there is a Republican-sponsored House bill — with a bipartisan list of co-sponsors — that would raise taxes. If approved, it would likely adversely affect pocket books and public health alike.
The measure, HB 192, aims to more than double the tax rate of e-cigarettes from 7% to 15% of the wholesale price. The bill’s vague stated intent is to redirect the increased proceeds “to address healthcare issues affecting Georgia residents,” but the tax increase is likely also designed to disincentivize e-cigarette usage.
At first blush, it would be easy to assume that this is a decent bill. While I believe the sponsor has nothing but the best intentions, the proposal is misguided and flawed. In an attempt to levy an increased “sin tax” on e-cigarettes, the bill’s author ignores the benefits of e-cigarettes relative to combustible cigarettes.
Everyone knows that cigarettes are deadly and especially impact Georgians. Around 16% of the population smokes, and nearly 12,000 die from smoking-related illnesses each year. Put simply, it’s a scourge, but the efficacy of traditional quit tools — like the patch and nicotine gum — has been underwhelming. Moreover, abstinence-only approaches have been doomed to failure for years.
Public health and policy experts have grappled with how to curtail smoking and frequently focused on traditional strategies with only limited success at best, but there’s another option: e-cigarettes. They are a relatively new player in the cessation market, but they have quickly become one of the top quit tools that smokers use to kick the habit. A 2020 study even found that they are a more effective cessation tool than nicotine gum, patches or lozenges. This should be cause for celebration, especially considering e-cigarettes’ reduced harm profile.
Despite their similar name, they don’t share many attributes with combustible cigarettes. They don’t burn tobacco, but rather heat up a vapor containing nicotine — a naturally produced alkaloid that doesn’t cause cancer. This different process means that e-cigarettes don’t rely on the same combustion process that releases thousands of chemicals — some of which are dangerous and highly carcinogenic.
Because of this different technology, Public Health England, which is essentially the U.K.’s version of the U.S. Health and Human Services, found that e-cigarettes are 95% less dangerous than combustibles. Of course, they aren’t entirely without harm — nothing inhaled is, other than pure air — but the promise they hold is incredibly valuable to public health.
Raising taxes on e-cigarettes, as HB 192 proposes, runs the risk of disincentivizing smokers from trying e-cigarettes as a quit tool, which runs counter to the bill’s apparent goal of promoting better health outcomes. This isn’t a hollow statement either. Price elasticity studies have shown that e-cigarettes are much more vulnerable to price changes than combustible cigarettes, and the proposed tax increase is considerable. It would match the vapor tax in Illinois, which is a state not normally known for smaller government policies and low taxes.
If the bill sponsor would like to create a fund to help address Georgians’ healthcare issues, there’s $6.6 billion in surplus revenue available. It seems that this would be a wiser source of funding than to tax a reduced harm product that helps Georgians quit smoking.
HB 192 ran out of steam before the Legislature’s crossover date — the day by which a bill must pass out of at least one chamber to be considered this year — but the measure can be reconsidered next year due to a quirk in the process.
Georgia’s legislative session spans two years — meaning it can be taken up in 2024 when the General Assembly reconvenes — but if lawmakers care about reducing deaths and taxes, they should let this proposal die.
