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Christie’s proposed e-cigarette tax is for public health, state treasurer says

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TRENTON Gov. Chris Christie’s administration wants to increase taxes on electronic cigarettes for the sake of the public’s health, state Treasurer Andrew Sidamon Eristoff said today.

“Our goal is to achieve rough parity with the tax burden on conventional cigarettes. Why? Our main concern is public health,” Sidamon Eristoff said at an Assembly Budget Committee hearing today. “Contrary to the claims of some users, e cigarettes have not been shown to be a ‘safe’ alternative to regular cigarettes. Nor are they a proven path to smoking cessation.”

Christie’s budget anticipates $35 million in revenue by applying the $2.70 per pack regular state tax on cigarettes to the electronic cigarettes, which deliver nicotine in the form of water vapor. Users of the products have flooded recent Senate and Assembly budget committee meetings to oppose the tax.

Because e cigarettes are relatively new products, there are no reliable scientific studies on whether they carry any health risks. E cigarette users and manufacturers have flooded recent Assembly and Senate meetings to speak out against the tax.

The Christie administration, meanwhile, has been sharply criticized by heatlh advocates for slashing the state’s anti tobacco programs four years ago.

“We’ve been very disappointed in their approach to public health because they zeroed out the comprehensive tobacco control program two or three years ago and never replaced it,” said Dr. Fred Jacobs, a former state health commissioner who is president of the board of directors for Global Advisors on Smokefree Policy, said in a phone interview.

In 2010, Christie cut $7.5 million from the state’s anti smoking programs. Since then, the state has spent little to nothing on smoking cessation and smoking education programs.

The American Lung Association ranked New Jersey 50th in the nation for spending on smoking control.

Jacobs said he has no problem with taxing the e cigarettes if the money goes tot eh right place.

“I wouldn’t mind if they taxed e cigarettes and earmarked that for public health programs, particularly smoking cessation programs,” Jacobs said. “That would be the most reasonable thing to do. But they have not earmarked it for that. The fear is that’s going to disappear into the deep, black hole of the general fund.”

Taxes were a major topic during Sidamon Eristoff’s three hour testimony. The treasurer said that between the electronic cigarette tax, “modest adjustments” to other taxes and through the closing of loopholes, the state anticipates an extra $205 million in revenue. One of those adjustments is requiring out of state online retailers to charge sales tax to New Jersey residents. Sidamon Eristoff said it’s “not a new tax” because residents are obligated to pay the sales tax themselves if retailers don’t charge it. Instead, he called it a “simple matter of tax parity.”

Assemblyman Joseph Cryan (D Union) scoffed at Sidamon Eristoff’s terminology. Cryan noted that Christie and other Republicans repeatedly hammered Democrats for approving similar increases.

“I’ve listened to the governor repeatedly talk about tax raises and 115 of them in the current 10 years before they got here. We’ve heard it repeatedly. Every one I just mentioned to you that you’re doing here, is a tax hike that you referenced previously and that was on that list,” Cryan said. “They are important to the fiscal plan. But in terms of the linguistics that we use, they are not tax alternatives. They’re not anything else. They’re tax hikes.”

The committee also discussed the state’s decision to change a formula so it can cut its payment towards public employee pension benefits. The Christie administration has faced some criticism for retroactively changing the formula it uses to pay into pensions to account for higher contributions public employees have made since the governor and lawmakers overhauled the troubled pension system three years ago. The change allowed the state to contribute $80 million less in the current fiscal year and $115 million less in the fiscal year that begins in July. Christie is proposing a $2.25 billion pension contribution for the upcoming fiscal year.

Sidamon Eristoff said the decision “more than appropriate.”

“It’s incumbent for us to look for savings wherever is appropriate in the state’s budget,” he said. “You would think less of us if we didn’t look under every rock, every stone and every pebble. It was brought to our attention that we had been doing something that wasn’t required.”

Eristoff said that in the two budgets immediately after the state overhauled the pension and health benefit systems, the state allowed increased workers’ contributions to go exclusively back into shoring up the under funded pension system. But Eristoff said the state wasn’t required to do that, and that it’s “returning to an industry standard” with the new calculation.

“It also strikes us as a little bit odd that if this had been so important to members of the Legislature, it might have made it in the final legislation,” Eristoff said. “But apparently it didn’t.”

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