'Vapes' shops to become vaporized
Certain members of the Vermont Legislature have quietly drafted bill H.879 that imposes a 92 percent tax on all vapor and e-cig products. This includes all vaporizers, e-juices, accessories, E-cigarettes, hookahs etc. The bill does not discriminate between nicotine, reduced nicotine or no nicotine products; rather it is an all-encompassing tax across the entire vape and e-cig segment of the industry.
This bill, if passed, will cause the sale price of these items to double overnight, resulting in a devastating effect on the thousands of Vermont residents who have found their way to using vapes and e-cigs as a healthier alternative to smoking cigarettes and for many, the means to quit the habit altogether. While vape and e-cig products have not yet been officially designated as "healthy," there is an overwhelming consensus from many experts and users, as well as many in the medical profession, that they are "healthier" than cigarettes. As a matter of fact, many users of these devices use them as a means to gradually move themselves away from smoking cigarettes and nicotine entirely. This is possible since varying levels of nicotine are available ranging from full strength all the way down to zero across vapor/liquid products.
It would appear that the purpose behind this tax is to discourage consumption of e-cigarette and vapor/liquid products due to potential health concerns. This reasoning would suggest that vaping or e-cigs pose the same health risks as cigarette smoking. Clearly, that is not the case. An article published on line in August 2015 by Time Inc states that vaping is 95 percent healthier than smoking cigarettes. The article also makes reference to how vaping is 40 percent less expensive than cigarettes on an annual basis.
Dr. John Hughes, a professor of psychiatry at UVM, says that the research is too scant at this point to link a danger to long-term use of e-cigs and vapor products. Hughes said that vaping is "healthier than smoking," that "e-cigarettes are significantly safer than tobacco products," and that the possibility of some metals released in the vapor are "small in comparison to the toxins in tobacco smoke." No one is arguing that vapor products are 'healthy'. But relative to other tobacco products, they are certainly 'healthier.' Taxing vapor products and e-cigarettes would discourage Vermonters to shift to this proven healthier alternative.
For the typical smoker, coming off cigarettes is difficult at best. Today, the combined incentives of the healthier choice along with substantial cost savings encourages even the most stubborn cigarette user to strongly consider moving toward vaping. This new tax would severely diminish the collective incentive required for many current smokers to take up vaping in lieu of their routine cigarette habit. By means of technology, research, market conditions and the overall desire on the part of the consumer, vaping has settled into a position and price point that makes it a logical and affordable pathway toward getting away from harmful cigarette smoking. This new tax will immediately reverse that trend for the resident cigarette smokers of Vermont.
Many lawmakers are perhaps concerned about the use of e-cigarettes and vapor products among young adults. In fact, the vast majority of vape shop customers are in the 35 to 70 age range. As a point of fact, vape shop retailers are required by law to ID their customers to make sure they are of age. Contrary to what some may think and others may propagate, there is no true effort underway to lure in a young non-smoker into the world of vaping. The many different flavors offered by the producers of the vape juices are intended to horizontally expand the offering to the current end user, much in the same way the craft brew industry has substantially expanded its offering with new styles and flavors along with catchy labels and titles. These expansions are market driven by the targeted and lawful consumers of these products. To suggest otherwise would imply that the state should also impose a 92 percent tax on all craft beers in the State of Vermont as well.
As a vape shop retailer, our store and our employees invest the required time, effort, and resources to encourage, educate and convert many long and short-term cigarette smokers to switch to vapor/liquid products. As a matter of disclosure, our store is also a cigarette retailer. Currently vape sales are only roughly 15 percent of cigarette sales. Also consider that the average carton of cigarettes transaction is many times more the value over the average vape transaction. Yet, although our efforts to convert our customers to vaping are trending our sales volume down with higher price point cigarettes, we take comfort in knowing that we are helping to increase awareness to our cigarette customers that there is a lower cost, healthier alternative. This equates to a healthier population among smokers.
There are several vape shops in Vermont. Our research indicates they all deploy the same level of detail, concern, education and determination. This tax will likely force most vape shops to shut down as many consumers will either go back to cigarettes or migrate across state lines to NY, MA or NH where no such tax exists.
Should this bill pass and for the loyal customers who continue to purchase vapor products in perhaps the few remaining vape shops in the state, they would also be unduly burdened by this tax. These types of excise taxes on consumable goods hurt low-income earners the hardest, since these individuals tend to spend a greater proportion of their income on consumption. This tax would not be "progressive," but rather "regressive."
The unintended consequences of this bill would be overwhelming and unfortunate.
Business will close. Vermont smokers will pay the hefty increase either in dollars or health. New York, Massachusetts and New Hampshire will pick up the lost revenue. Vermont will not only fail to see the anticipated new revenue from the 92 percent tax but it will also see a reduction in sales tax revenue from these products as the consumers move their purchases across state lines to bordering states. Additionally vape shop employees will be laid off and would then require state benefits. A few states have experimented with this type of tax as a source for additional state revenue. After Montgomery County in Maryland passed a wholesale tax on these products, the actual revenue collected was roughly 80% below the expected revenue from the tax due to lawmakers' failure to consider market forces. Of the few other states that tried this approach, they too have discovered that several factors were not considered when enacting this type of taxation.
Sometimes we need to consider the greater good. It would be ideal if there was no need for the vape or e-cig industry. However, this is not reality. Cigarettes have and will be around for quite some time. The vape industry has tapped into the means to save cigarette smokers money, decrease their health risks, indirectly lower the burden of cost for their health care, allow them to spend the savings on other goods and services and provide jobs and revenue for the state. This new tax will rapidly extinguish all of this and bring us back to a period before vapes and e-cigs existed.
Edward Dublois is the owner of the Beverage Den and Vape Shop in Bennington.
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