Taxes are calculated on purchased products, and some items have a higher tax rate than others.
So let’s look at road tax. Usually road tax is the tax on fuel purchases. Over the years vehicles have become more fuel efficient decreasing the tax revenue because less fuel is purchased so the tax per unit (liter or gallon) has gone up. All you see usually is the cost per gallon.
So the penalty for being more fuel efficient is a higher tax rate.
The same thing is happening with tobacco. A certain amount of tax revenue was being generated by the tax on tobacco, as more and more people quit revenue began to go down so the tax per unit had to raise to keep the tax money coming in.
Now the government is trying to get it’s claws into the ecig market and begin collecting on that.
What are your thoughts?