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Oregon lawmakers debate e-cigarette taxes

Oregon lawmakers debate taxes on electronic cigarettes as demand grows

SALEM, Ore. (AP) -- The Oregon Legislature is beginning to look at whether to tax electronic cigarettes.

Department of Revenue officials told House and Senate committees on Tuesday that the state has no taxes on electronic cigarettes, which are battery-powered devices that contain nicotine but not tobacco. E-cigarettes are growing in popularity as alternatives to traditional cigarettes.

Democratic Rep. Phil Barnhart of Eugene, the chairman of the House Revenue Committee, said the state should look at taxing e-cigarettes because they contain nicotine, an addictive substance.

"I'm always interested in keeping drugs away from kids and generating some money," Barnhart said.

Others said lawmakers should tread carefully while more data is collected about e-cigarettes.

"If there's a thought that someday we might tax these things as we do cigarettes, it would seem odd that we would disincentivize people from moving away from something that's dangerous to something that's less so," said Rep. Cliff Bentz, R-Ontario.

E-cigarettes heat a liquid nicotine solution and create vapor that users inhale. Because they don't contain tobacco, they don't fall under tobacco taxation laws in 49 states, including Oregon.

Even if the state decides to tax e-cigarettes, it's far from clear how it would go about assessing the charge, the Revenue Department's Deanna Mack told lawmakers. Cigarettes are taxed with a stamp on each pack, and other tobacco products are assessed based on the wholesale price or the weight of the product.

There's a wide variation in styles of e-cigarettes and in the amount of nicotine they consume.

"We haven't had a chance to do a complete assessment on this, but we know that it is an issue and it's something we're looking into," Mack said.

Nu Mark LLC, which is developing e-cigarettes for Altria Group Inc., the parent company of Philip Morris, urged caution.

"Nu Mark believes that governments should refrain at this point from taxing new nicotine-containing products altogether until there is a better understanding of where the consumers ultimately land with this emerging category, and to allow regulators to assess the appropriate scope of regulations for these products," said spokesman David Sutton.