N.J. officials debate taxing e-cigarettes

State officials say public health in New Jersey - as well as the state budget - would benefit from applying the $2.70-per-pack cigarette tax to electronic cigarettes, but the argument is receiving a cold reception among some legislators.

Health Commissioner Mary E. O'Dowd pointed to public health benefits from raising the cost of smoking.

"Increasing the cost for the product is a very effective strategy to reducing utilization," O'Dowd said during the Assembly Budget Committee hearing on the proposed budget for the Department of Health for the fiscal year starting July 1.

She said she was most concerned with the use of e-cigarettes by children, adding that the perception that the products are safe is wrong. E-cigarettes are battery-powered and use heat to vaporize a liquid solution that generally contains nicotine and flavoring.

"Our children are using them, and these are children who were not necessarily smokers before," O'Dowd said. "This is potentially a new gateway to nicotine addiction."

Democratic legislators said it might be too soon to impose the cigarette tax on the products, which are subject only to the state's 7 percent sales tax. They also questioned the estimate included in Gov. Christie's budget proposal that the state would raise $35 million from the tax.

"It seems like we're going to catch a lot of people with this price point that will either go elsewhere to buy or will not buy it and continue to smoke a cigarette, which appears to be more harmful," said Assemblyman John J. Burzichelli (D., Gloucester).

Assemblyman Joseph Cryan (D., Union) said the state might "jump the gun" in discouraging the use of the products through a tax when it is possible that they could be helpful in reducing smoking.

O'Dowd said that the state plans to have an exemption from the tax for residents who have been prescribed e-cigarettes as part of an effort to quit smoking.

Assemblyman Benjie E. Wimberly (D., Passaic) noted that Christie cut $7.5 million for smoking-cessation programs in the 2010 state budget. He questioned why Christie's new budget proposal does not commit e-cigarette tax money to public-health efforts.

New Jersey is the only state that does not spend state money on reducing smoking, according to the antismoking organization the Campaign for Tobacco-Free Kids. Its adult smoking rate of 17.3 percent is 13th highest in the country, while its cigarette tax is eighth highest.

O'Dowd noted that the federal government funds different programs aimed at preventing young people from smoking and helping smokers quit, including a free telephone counseling service.

But O'Dowd emphasized that U.S. Centers for Disease Control and Prevention studies have determined that public-policy changes like the state's Smoke-Free Air Act - which bars smoking in workplaces and many public places - and raising cigarette taxes are most effective at reducing smoking. O'Dowd noted that roughly 38 percent of the state's municipalities have adopted smoking bans.

She also pointed out that raising cigarette prices has a particularly strong effect on children, since it puts the price "outside the scope of what they're willing to pay."

O'Dowd added that the prevalence of smoking in the state remains too high "and we're working to reduce that."

Further, she said, the combination of marketing the products as safe and the addition of "child-friendly" flavors posed a potential danger.

"These are tactics that we have seen in the past, and many of these organizations have been purchased by tobacco organizations, so they are very sophisticated in their marketing strategies," O'Dowd said.

The Food and Drug Administration doesn't regulate e-cigarettes but has submitted a plan to do so. This plan is opposed by the e-cigarette industry.

When Wimberly asked O'Dowd if she would recommend that part of the e-cigarette tax revenue be used for public-health purposes, she said, "That is certainly an option." She later emphasized that she supports Christie's budget.