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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 20, 2017 09:36 AM
From: Representative Jeff C. Wheeland
To: All House members
Subject: Vape Product Tax
As part of the FY 2016-17 Commonwealth Budget, the General Assembly passed a 40 percent wholesale tax on E-cigarettes (also known as vapor products). The effect of this tax on the vapor products industry has been nothing short of devastating. Nearly 100 small-business, bricks and mortar vapor shops have closed their doors. Several hundred Pennsylvanians have lost good-paying jobs. And, consumers of these reduced harm products have seen prices rise and availability dwindle.

As a result of these store closures and the significantly reduced sales, it is likely that the revenues actually collected from this punitive tax will fall well short of estimates ($13.3 million for the current fiscal year). And, the Commonwealth is going to lose additional revenues as collections of the sales tax on these products and income tax from industry employees will also be significantly eroded. In our haste to raise revenues to pass a balanced budget, we managed to take away the livelihoods of hard-working small business owners and put hundreds of Pennsylvanians out of work. All for a few million dollars in new net revenues.

Furthermore, there is mounting evidence that identifies vapor products as a reduced-harm alternative to smoking combustible cigarettes. For instance, in 2015, Public Health England issued a report which concluded that e-cigarettes are as much as 95 percent safer than smoking cigarettes. And, just last year, the Royal College of Physicians, one of the world's leading medical associations, released a historic report that, among other things, found that: e-cigarettes appear to be effective when used by smokers as an aid to quitting smoking and that the public can be reassured that E-cigarettes are much safer than smoking. In fact, this report concluded that cigarette smokers should be reassured and encouraged to use E-cigarettes.

For these reasons, I am introducing legislation that will eliminate the 40 percent wholesale tax and replace it with a 5-cents per milliliter retail tax on e-liquid. This tax is similar to levies on these products enacted in other states, including North Carolina and Louisiana, and will help protect the remaining small-business, bricks and mortar vapor shops still in existence, generate predictable and sustainable revenue for the Commonwealth, and continue to make these reduced harm products available to all Pennsylvanians at affordable prices.

Please join me in co-sponsoring this important legislation.

Introduced as HB1477