2017 State taxes and Vaping

January 4, 2017
Vapor News and Views

News and views on vapor tax and regulatory issues from across the United States. The best way to stay up to date with what’s happening in Washington and in your state capitol.

Friends,
Hope you all enjoyed the Holidays and caught up on some much needed rest! In this edition of News and Views, I’m going to focus on the threat of new excise taxes in the states. Several weeks ago, I sent you alla map of tax threats and rates in 2016. This week, we take a look at the most significant factor that will contribute to the threat of taxes in the states: budget shortfalls, or as they’re more accurately described: state overspending problems.
And a note to readers. Thank you for all of your helpful feedback since our launch in November. As a result of your suggestions and requests, this will be the one and only 2017 legislative session “deep dive” into an issue as part of the News and Views. For those subscribers who may be interested in more of this type work, ATR will be launching a subscription-based service for vapor businesses, organizations, and interested parties in the coming weeks. Don’t worry though, the free version of the Newsletter isn’t going away! You’ll keep receiving content relevant to developments in the vapor space from across the country and in Washington, D.C.
Shoot me an email at pblair@atr.org to learn more about Vapor News and Views Pro.
Paul Blair
State Affairs Manager
Americans for Tax Reform
State Overspending May Present a Problem for Vapers This Year
It’s Tax (Threat) Season!
As legislative sessions kick off across the country, three-fifths of states face overspending problems, a strong indicator of which states may consider tax hikes. Where the willpower to rein in spending fails, consumers and businesses like you may end up paying the price.
Headed into 2017, seven states have excise taxes for vapor products on the books, with only one (California) yet to take effect. Though enforcement is somewhat unclear, Kansas’s 20 cents per mL tax took effect on January 1.
For a deeper dive into the size of each state’s overspending problem, click here to read “State Overspending May be a Significant Problem for Vapers in 2017.” 
No one factor determines the success or failure of an effort to raise taxes, cut spending, or rein in government. History, however, strongly indicates that where there’s smoke, there may be fire. Where lawmakers are looking for an easy target, they see smokers. And where they see smokers, a few will see vapers too.
Based on a number of factors, here are the tax threat trends and states to watch for:
  • As fell California, so too may Oregon and Washington, which both face significant overspending problems this year and a below average commitment to spending restraint. The domino effect.
  • Low energy costs are great for consumers and horrible for states that rely on high prices for tax revenue. Cigarettes are on the chopping block as a result in Oklahoma and Alaska, which both face significant reoccurring shortfalls. Vapor can always make an entrance in these situations.
  • Indiana has a House speaker who wants to raise the cigarette tax and a new governor who seems less committed to its opposition than VP-elect Mike Pence was last year. Watch for a proposal to raise the cigarette tax and a potential new vapor tax that comes with a “compromise” offer from lawmakers to reform the current state vapor regulation. “Do you want destructive regulations that kill your business or a small tax you can live with?” I can envision them asking. I suspect I’ll be headed back to Indiana soon…
  • It’s biennial budget year in Ohio and the incumbent governor proposed a vapor tax as part of his large tax reform package 2 years ago. I wouldn’t be surprised if another round of income tax cuts were proposed, paired with tax hikes on a number of industries including vapor (cigarette tax went up in ’15).
  • New York is interesting. The state already has the highest cigarette tax in the nation ($4.35 statewide, $5.85 in NYC). I don’t see the cigarette tax going up any time soon (half the state’s cigarettes are smuggled in via black market for God’s sake!) so will a stand alone vapor tax bill rear its ugly head in the midst of growing overspending problems? It’s also now is the state represented by the U.S. Senate Minority leader who has called for recalls of “ticking time bomb” vapor products. There are tax proposals every year… But I don’t think this is going to be the year it happens.
  • The annual “It Looks Like Smoking” crowd shuffling in to justify a wide range of vapor taxes across the country. Budget shortfalls just give proponents another reason to come for your money. This may explain proposals in +10 states this year.
  • Hawaii considers A LOT of tobacco bills every year and was the first state to raise the age to smoke/vape to 21. The state had to make this list.

Check out my recent post for more information, shoot me an email if you think I’m completely wrong, and share this map on Facebook and Twitter for those of your unfortunate friends and colleagues who aren’t yet subscribers!

Numerous States Organizing Early for Legislative Action on Vapor Issues
A few states already have events planned at the capitol.
  • Pennsylvania Capitol Rally II on Monday January 23rd in Harrisburg from 10:00AM-11:30AM. Plan on staying later to meet with your state legislator to advocate for reducing the 40% tax to a more reasonable per mL tax. Additional event details here.
  • Oregon Vape Day at the Capitol on February 7th at 9AM in Salem from 9:00AM-3:00PM. This is not a rally; it’s an opportunity to join a lobbyist for a meeting with your state legislator. Sign up here.

Organizing an event in your state or need suggestions to put something together? Shoot me an email and I’ll see if I can help!

Right to Vape Tour Releases Fourth Episode
The Right to Vape Tour‘s Episode Four was just released and features interviews from myself and Christian Berkey, the CEO and Founder of Johnson Creek Enterprise. Check it out.
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If you think this email was informative please do forward to friends or colleagues who might be interested in Vapor News and Views! They can subscribe by clicking here.
Paul Blair | Americans for Tax Reform | 202-785-0266 | pblair@atr.org | www.atr.org
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