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On Tuesday, HB 2342 advanced from the Pennsylvania House Committee on Finance with a vote 19-4 to alter the Commonwealth’s new tax on e-cigarettes and vapor products, which is set to take effect October 1.
The vaping tax, a “40 percent tax on the wholesale price of electronic cigarettes” was included as part of a $1.3 billion tax increase which passed in July. Since then vape shop owners have been facing uncertainty, and some have even shut down their businesses. The day before the house committee vote, advocacy groups rallied at the Capitol and told Dave Marcheskie of ABC27 News that 50 vape shops in Pennsylvania have closed due to the tax.
An alternative tax sponsored by Representative Jeff C. Wheeland (R-Williamsport) introduced in August would substitute the 40 percent tax with a 5-cents-per-milliliter tax, creating a much more manageable tax for vape shop owners and consumers.
In a memorandum, Rep. Wheeland expressed his concern over the impact that the tax would have on vape shops, stating “[i]f these small businesses do decide to close and lay off workers, not only will the new vape tax revenues fall short of estimates, but the state may lose significant sales and income tax revenues.”
Bob Dick, senior policy analyst at the Commonwealth Foundation commented that the “tax unfairly targeted one industry to the point of near extinction. We’ve already seen approximately 50 vapes shops close their doors because of this tax, and more will follow unless it is repealed.”
In August, Heartland interviewed Chris Hughes, owner of Fat Cat Vapor Shop, LLC, a vape shop in Montoursville, Pennsylvania for a podcast. During the interview Hughes expressed fears that he would have to shut down shop due to the tax. In September, Fat Cat Vapor Shop did shut down its doors “and will remain closed unless a fix to the 40% tax is implemented soon.”
The committee’s vote today is a positive step for vaping consumers and small business owners who are facing extinction with this very misguided tax. As tobacco harm reduction products, electronic cigarettes and vaping products have helped thousands of smokers quit traditional tobacco products. More importantly, they have created a new industry that adds to the economy. The proposed 40 percent tax would decimate the industry and could force those who quit smoking and have switched to vaping to switch back to smoking traditional cigarettes, which are significantly more harmful.