New state vaping taxes leaves the Connecticut vaping industry at risk with a severe 75% percent wholesale tax on vaporizer products.
Democratic Governor Dannel Malloy released a budget proposal for FY18 and FY19, which included a proposed 75% wholesale tax on vaporizers.
Malloy is urging state lawmakers to pass this budget with urgency, which also sees tax hikes on smokeless tobacco from $1 per ounce to $3 per ounce, by the end of September.
Implications Of State Vaping Taxes In Connecticut
Meanwhile, advocates are bracing themselves for extremely harsh state vaping taxes to go into effect next January, which could lead to the demise of the vape industry in the Connecticut.
Moreover, many fear that price hikes and unavailability of vape products will force ex-smokers who made the switch to safer alternatives back to the harmful analog sticks.
David Sweanor of the Center for Health Law, Policy and Ethics at the University of Ottawa stated, “This is basic economics. Price differences between substitutable goods shapes demand for those goods.”
“If we are talking about the impact of price differences between apples and oranges we are likely just explaining the concept to students. But when we are talking about a tax that reduces the economic incentive to switch from lethal cigarettes to massively less hazardous vaping products, we are talking about the loss of lives.”
– Gregory Conley, President, American Vaping Association.
Learning From Vaping Taxes In Pennsylvania
The state vaping tax proposal in Connecticut looks to double the 40% wholesale tax in Pennsylvania. Results from the tax in PA has caused severe damage to the industry since implementation in 2016, seeing many businesses to shut down and forcing consumers to buy vaporizer products out of state.
“As we saw in Pennsylvania, where a 40 percent wholesale tax led to the shuttering of nearly 150 stores, consumers will turn to out-of-state and internet sales when excise taxes are set too high,” said Gregory Conley, president of the American Vaping Association.
“Nearly doubling Pennsylvania’s ridiculous tax is a recipe for disaster. Even worse, this tax also threatens to reverse the progress that has already been made in reducing Connecticut’s smoking rate. It is absolutely critical that the Connecticut Legislature rejects Gov. Malloy’s new tax on vapor products.”
According to the Department of Revenue, $13.7 million has been brought in Since the state vaping taxes in Pennsylvania went into effect, Unfortunately, over 100 of the state’s 400 vape shops have closed, says the Vapor Technology Association.
The businesses that have remained open are struggling.
Consumers that remain loyal to the safer alternatives are forced to pay more for vaporizer devices while tobacco products and cigarettes remain conveniently available in stores and gas stations throughout the states.
Why do state vaping taxes continue to increase?
Can CT and PA Vapers be Saved?
SB 508, a bill that would have changed the PA’s extreme 40% tax was proposed by Senator Camera Bartolotta earlier this year. Rep. Jeff Wheeland and Bartolotta suggested the state was going to face serious consequences from vape shop closures.
Local vape shop owners were in approval of this bill and considered it a significant step in the right direction. “We prefer no tax, but we can work with this one,” said Ace of Vapes owner Brandon Mueller at the time.
No significant movement was made with this bill or any of the others proposed.
“There’s really no conversation taking place. The silence is killing us,” said Amelia Rivera, who runs the Pennsylvania Vape Association and also co-owns a vape shop. She claims the tax has cut their income by more than half.
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