New Jersey Senate Democrats Propose Tax Hikes on Cigarettes and E-Cigarette Fluid Sales to Boost Revenue

Strategic Insights -

Top-ranking Democrats in the New Jersey Senate have introduced tax proposals aimed at raising levies on cigarettes and the fluid used in vaping devices as part of Governor Phil Murphy's budget plan. The proposals, which were pitched as part of Murphy's budget plan, would increase the cigarette per-pack tax from $2.70 to $3 and triple tax rates on electronic cigarette fluid sales at both wholesale and retail levels. The move comes as the state faces tightening fiscal conditions, a deficit, and uncertainty over the future of its federal funding.

Key Takeaways:

  • The proposed tax hike on cigarettes would generate an estimated $406.3 million in revenue for the fiscal year, up from an expected $365.3 million without the increase.
  • The higher tax rate would allow some money from New Jersey's cigarette tax, about $10.7 million, to flow into the state's general fund.
  • The tax hike on e-cigarette fluid sales would increase the tax rate on bottled vaping fluid to 30% of retail price, from 10%, and require distributors and retailers to take inventory of their stock and report it to the state.
  • Opponents of the plan argue that raising the tax would harm convenience stores, gas stations, and other retailers that carry tobacco products, and push smokers to cross state lines to purchase cigarettes in Pennsylvania.
  • The tax hike on nicotine products, including e-cigarettes and tobacco, is intended to generate $1.2 billion in additional revenue to help plug a budget deficit.

Statistics:

  • Estimated revenue generated by the higher cigarette tax: $406.3 million
  • Expected revenue generated by the current cigarette tax: $365.3 million
  • Tax rate on e-cigarette cartridges: 10 cents to 30 cents per milliliter
  • Increased cost of a four-pack of Juul cartridges: about 56 cents
  • Increased cost of a four-pack of Vuse Alto cartridges: roughly $1.44
  • Number of stores fined for selling illegal flavored vapes: 19
  • Number of businesses warned about the ban on flavored vapes: nearly 11,000

Sources:

  • New Jersey Monitor: "Governor Murphy proposes $58.1 billion budget that raises fees, avoids broad tax hikes"
  • New Jersey Monitor: "Budget experts warn lawmakers of upcoming fiscal uncertainty"
  • New Jersey Monitor: "New Jersey must do more to stop illegal vapes"
  • New Jersey Department of Treasury documents: "Cigarette tax revenue"