Pennsylvania legislators may have just placed the final nail in the coffin of the state’s vaping industry by passing a 40% e-cig tax that threatens over 300 vape shops and small businesses. The tax was hidden inside a $1.3 billion bailout package earmarked to resolve the state’s massive budget deficit. It is also the largest tax increase approved during a presidential election year in the recent history.
The date in which the new regulations will take effect is still unclear, but most political insiders expect the tax increase to officially take hold is less than 90-days. Once implemented, all retailers of electronic cigarettes and vaping products will be required to pay an immediate “floor tax” at a rate of 40% of their current inventory. With one fell swoop, the Pennsylvania vaping industry may have just been completely wiped out overnight.
The state’s budget deficit is so severe that Gov. Tom Wolf (D) had originally asked the Pennsylvania State Assembly for over double the received funds, or a whopping $2.7 billion. Yesterday, the newly modified budget with the included 40% e-cig tax was approved by a margin of 116-75 in the House and 28-22 in the Senate. A combination of both Democrats and moderate Republicans voted in favor.
Even if vape shop owners in Pennsylvania can cough up the 40% floor tax, they will still have trouble competing with online retailers. Why would a consumer want to pay $120 for a vape mod from a “brick and mortar” establishment when they can go online and get it for about $80 and with overnight delivery?
Meanwhile, even e-commerce sites based in Pennsylvania will be forced to pay the floor tax on all inventory. As a result, online prices will see a significant increase, and customers will likely head to an out-of-state alternative as a resort. Either way you look at it, vaping in Pennsylvania seems to be heading towards extermination.
However, a last ditch effort to reach a new compromise is underway by many of the vaping advocacy groups, including SFATA and CASAA. All members of the vaping community are encouraged to contact Pennsylvania officials to express their outrage. If it can happen in Pennsylvania, it can happen anywhere. Contact information can be found on the SFATA and CASAA websites.