I realize this often isn't the case, but the pursuit of taxing specific behaviors is supposed to only be used to fund things caused by that behavior: that way if some people are costing the government money, they pay the price rather than all of society, making everyone's incentives align. If those people stop doing the thing, then the cost is gone and the government should not care that they aren't collecting the money to pay for it anymore. As an example: taxing people who use roads to pay for roads encourages people to use roads less, which puts less wear on the road surface and means you need fewer lanes and thereby less road. If this mechanism is used correctly, and I realize it often isn't, the real problem is only when there is no good way to directly tax the damage and so a proxy is used: we don't tax people for miles driven, we tax them by the gallon of gas purchased, and while that works for pollution control (and people thereby think it makes sense that people who use less gas have to pay less gas tax, under an assumption that the goal is to encourage less burning of gas), the taxes are used to fund roads, and electric cars still put as much wear on the road as gasoline cars; this screws up the incentives and makes the government kind of want people to keep burning gas so they keep getting taxes to fund the roads they continue to need. But this is a slightly different problem than what you are describing. In the case of cigarettes, I was under the impression the goal of the tax was to fund public health infrastructure due to the cost to the public of caring for victims of smoking, and so while I realize the government always mixes their accounts and crosses purposes and generally screws this up, if e-cigarettes are generally safe then that should have been a case of working incentives.