Anti-Smoking Group Fuming Over Proposed Tax On E-Cigs

Mar 4, 2015

Gov. Wolf is proposing a 40 percent tax on the wholesale costs of vapor products including e-cigarettes.
Credit Creative Commons Lauri Rantala

In his first budget proposal, Gov. Tom Wolf called for a series of tax changes—increases and decreases—most notably hikes in the personal income tax from 3.07 to 3.7 percent and the state sales tax from the current 6 percent up to 6.6 percent.

But another tax proposal has angered a growing industry in the commonwealth and at least one anti-smoking organization.

Wolf wants a 40 percent tax on the wholesale price of vapor products such as electronic cigarettes as well as on cigars and loose and smokeless tobacco.

“A new survey (National Tobacco Behavior Monitor) came out just last week indicating that 3 million Americans have quit smoking by switching to e-cigarettes or vapor products,” says Bill Godshall, founder and executive director of Smokefree Pennsylvania. “To say we should tax these products at 40 percent, which is higher than any other product on the market, we don’t tax alcohol, whiskey anything like that [at that rate],  and yet these products are saving lives.”

The survey was presented at the 2015 Society for Research on Nicotine and Tobacco Conference in Philadelphia.

The governor is also proposing a $1 per pack increase in the cigarette tax which Godshall supports because  “cigarettes cause 99 percent of call tobacco-attributable morbidity, mortality and health care costs.”

If approved, smokers would have to pay $2.60 per pack in taxes. That increase is projected to generate an additional $358 million starting October 1.

Godshall admits that there are still some questions about any health risks associated with e-cigarettes but the consensus of scientific studies conducted so far is that “they are 99 percent—plus or minus one percent—less hazardous than cigarettes.”

“I think we need to look beyond that and say ‘hey, if something ‘s that much less hazardous than cigarettes, we should support it’ instead of  saying ‘unless we know it’s 100 percent  we can’t allow people to use it;’  or we should tax the hell out of it and demonize it,” Godshall says.

Not unexpectedly, the American Vaping Association opposes the governor’s propsed tax on vapor products.  “In a state with over 2 million smokers, it is unconscionable to target these smoke-free products with new taxes,” said association President Gregory Conley in a statement.  “Discouraging adult smokers from switching to vaping will only result in more disease and death. Pennsylvania's 120+ vapor retail specialty stores will also suffer under this bill. Many consumers will avoid the tax by shopping over state lines or through the Internet,” the statement said.

According to the Wolf administration, the tax on vapor products, cigars and smokeless and loose tobacco is expected to generate $84 million annually.

Godshall said he doesn’t understand why the governor wants to tax a product that helps people quit cigarettes.  “He didn’t propose taxing nicotine gum, lozenges and patches at 40 percent even though the studies show that are only 5 percent effective; 95 percent of people who use gum, lozenges or patches to quite smoking go right back to cigarettes.”

According to Godshall his organization supported what he called  “a modest tax” proposed by then Gov. Ed Rendell on cigars and smokeless tobacco, but Wolf’s proposal to tax them at the same rate as cigarettes “is just unfair.”  He says that these OTPs—other tobacco products—are less hazardous than cigarettes.

Pennsylvania is the only state not to tax smokeless tobacco and the only state other than Florida not to tax cigars.