Vape Tax Debate Still Hung Up on What to Tax: The Price or the Volume?

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News > Local News > Vape Tax Debate Still Hung Up on What to Tax: The Price or the Volume?

Vape Tax Debate Still Hung Up on What to Tax: The Price or the Volume?

Wholesalers, retailers agree best approach would collect tax from wholesalers, not stores

(INDIANAPOLIS) - You don't pay cigarette taxes when you buy e-cigarettes. A legislative study committee is taking a second look at changing that.

The House passed a vape tax this year, but the bill stalled and died in a dispute over what the rate should be, and what to base it on. Of the 16 states which already tax e-cigarettes, six tax the amount of e-liquid, while 10 charge a percentage of the price, either at retail or wholesale. And some legislators suggest the tax should be based on the amount of nicotine.

Health groups and the Indiana Chamber say the tax is needed to discourage youth vaping. They're arguing for a 24% tax, the equivalent of Indiana's cigarette tax of about a dollar a pack. Tobacco Free Indiana says teenagers are especially sensitive to price. And Indiana State Medical Association president Lisa Hatcher says even with her adult patients, a price increase is three-to-six times more effective in persuading them to quit than just hearing her warnings of the health effects.

Other states' vape tax rates range from 15% in Illinois to 95% in Minnesota.

Hatcher argues vaping is a health danger itself, especially for still-developing adolescent brains. She told Wednesday's study committee hearing about examining an eighth-grader who reluctantly admitted vaping two Juul pods a dav. She says that's the nicotine equivalent of two packs of cigarettes a day. And she says a significant percentage of teenage vapers become adult smokers.

Wholesalers and retailers oppose the tax. But they agreed that if there's going to be one, it'd be more efficient to charge the tax at the wholesale level. Bob Coughlin with convenience-store wholesaler Eby-Brown says instead of thousands of retailers from big-box stores to corner grocers with limited resources for tax paperwork, a wholesale tax would put the responsiblity on a small number of companies, typically with a tax department with experience in keeping those payments straight.

The study committee may issue recommendations on Friday, but any report it issues is nonbinding. The full legislature gets back to work in January.

(Photo: librakv/Thinkstock)

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