Published on January 24th, 2017 | by Jimmy Hafrey
New York joins the list of states that are recklessly taxing vape liquids as tobacco products, and New York vapers can hold Governor Andrew Cuomo responsible.
LoHud, a subsidiary of the USA Today Network, is reporting that Gov. Cuomo, a Democrat, has proposed a 10-cent per milliliter tax on all vape e-liquids. The tax hike was buried deep into the governor’s $152.3 billion state budget proposal, which was revealed publicly last week. An amendment to the state’s Clean Indoor Air Act will now see vaping banned from indoor spaces such as restaurants and workspaces.
The tax hike was explained by Cuomo spokesman Rich Azzopardi, who released a statement that said: “This is a matter of public health consistent with New York’s longstanding and successful smoking cessation efforts.”
But that’s not the only reason this tax hike was implemented: a loss in revenue from cigarettes is also to blame.
The state received about $1.3 billion in taxes on tobacco products alone during the 2015-2016 fiscal year. This number is thought to only decrease as the years go on because fewer people are smoking in general. In fact, many New Yorkers are quitting by using vaping as their primary smoking cessation method.
Adding a vape tax to products is estimated to yield an additional $3 million in profit to the state, according to the state’s budget division.
However, this profit can only be generated if the tax does not hurt vape companies and businesses; because this is a wholesale tax and not a state tax, businesses will be required to pay the tax, which will lead them to increase the price of vape liquids.
Most states who’ve enacted such a vape tax have seen a decline in profit from the industry. This is generally considered to be a consequence of taxing small businesses at a high rate, especially considering that many businesses are already financially strapped due to the PMTAs that were passed into law when the FDA decided to regulate vaping as part of the tobacco industry.
In fact, in many states around the country, as Americans for Tax Reform points out, many states have not only seen less-than-stellar revenue contributions from the vape community, they have also seen the vape industry dry up. States like Pennsylvania and North Carolina have both seen a rise in bankruptcies and store closures from vape companies, which leads to a loss in jobs, sales, income, and excise tax revenue.
But Gov. Cuomo and his state seem unfazed by the pattern set out by other states. New York is already home to high taxes for cigarettes, leading many in political circles to believe that taxing vaping at a high rate would be accepted.
The state and its governor have conveniently forgotten that vaping is a smoking cessation method that has already been proven to be 95 percent less harmful than cigarettes. Additionally, many vape liquids do not contain nicotine, which is naturally derived from tobacco or is made with synthetic nicotine, which bypasses tobacco altogether to make the ingredient in the lab.
The governor has also neglected the dozens of studies done around the world on the effect of vaping, which has been consistently shown to be safer than cigarettes. It has also refused to look at the new vaping policies of America’s greatest ally, Great Britain, a country that has begun to encourage businesses to cover vaping as a smoking cessation method for workers.
The state has instead decided to focus on a biased report that was released from the U.S. Surgeon General’s Office that implied a 15 percent jump in high school students that had used vape products. That study, which was completed over 5 years, does not mention which students are regular vapers, how many used vaping to quit smoking, or indeed any type of pattern which would indicate that vaping is a gateway to smoking as the U.S. Surgeon General has repeatedly claimed.
The tax hike has not gone unnoticed by vape advocates.
“It makes no sense to treat these tobacco-free, smoke-free, and often nicotine-free products the same as deadly combustible cigarettes,” Gregory Conley, who is president of the American Vaping Association, said in a statement when the tax hike was revealed.
Should the tax hike be approved by state lawmakers, it would take effect six months after the budget is passed and would be wholesale, meaning that small businesses would have to pay the tax for their inventory. All vape liquids would be applicable to this tax hike, regardless of nicotine content.
While there is no guarantee that this tax hike will hurt vape businesses, it is clear that under the strain of the current FDA regulations and a separate tax hike in New York, vapers might see a quick end to the industry in their state. Online purchases are still available, all of which are not subject to taxation and can provide some kind of relief to vapers who are using these products as a way to quit smoking traditional cigarettes.