Despite what you may have been taught in seventh-grade civics class, the central role of all levels of government is to tax anything within its borders. And, consistent with their penchant for expansion, the government is always looking for areas in which it can increase the reach of its taxing power. So, it should come as no surprise that state governments are considering levying higher taxes on the newest fad: nicotine pouches.
Several state legislatures are considering a massive tax hike on consumers who indulge in certain tobacco products. The Washington state legislature is attempting to expand its taxing power to encompass nicotine products. The Rhode Island General Assembly is considering an 80 percent increase in its excise tax on nicotine pouches. And Illinois’ new tax increase on tobacco products went into effect on the first day of July, pushing the tax up from 15 percent to 45 percent.
While they may be gaining popularity now, nicotine pouches aren’t new. Pouch products have been sold in the United States for 10 years, and they’ve been available (and popular) throughout Europe for decades. The Swedes have been enjoying pouch-like tobacco products since as early as the 1600s. So, why is the government just now trying to increase taxes on these not-so-new products?
Many lawmakers are reportedly concerned with the rise in popularity of nicotine pouches in the United States, especially among young users. That’s an understandable concern and a sentiment that has been expressed nationwide, even at the federal level.
What these policymakers aren’t concerned with, however, is that smoking and vaping rates among American youth and adults are at an all-time low.
One may wonder if these historically low levels of smoking have coincided with the rise in popularity of smokeless nicotine alternatives. State legislators have unfortunately never been curious enough to make that obvious connection — they are far too concerned with the ripe opportunity to implement so-called sin taxes on products like nicotine pouches.
The government employs sin taxes to dissuade its citizens from consuming anything it deems to be “bad.” The thought process of policymakers is that consumers will stop buying a product, or buy it in a lower quantity and at a lesser frequency, if a heavy enough excise tax is added to make the product less desirable through higher costs. In reality, the effects of sin taxes don’t quite work out as policymakers intend.
We have seen sin taxes waged on all sorts of activities and vices the government wants to curtail — soda, gambling and pornography — not just tobacco products. Its wide usage, however, does not mean that it is an example of good policy.
Sure, the profits from sin taxes can be funnelled into “good” programs. A portion of California’s excise tax on tobacco products, for example, is used to fund tobacco-related health education programs and disease research. That doesn’t make sin taxes themselves virtuous or a good source of funding for these programs. Through these taxes, the state government is unilaterally deciding what products to upcharge. Who is the government to determine what is morally good? And where does that power stop?
Sin taxes punish citizens who purchase products that don’t fit the government’s moral compass. At the moment, nicotine pouches are one of the safest products on the market that users of nicotine have available. Levying taxes on a harm-reduction tool should be taken as an affront to the vital work that has already been done to lower smoking rates in our country.
Sin taxes aren’t deterring consumers from using the products — they’re only making it more expensive for these people to make their decisions with their wallets and their health.
