[H]ouse lawmakers approved an e-cigarette tax and new restrictions on those products Friday as part of the final version of an omnibus health care bill that includes $12 million in new spending designed to improve primary care and increase access to medical services.
The legislation raises the money, in part, by increasing the cigarette sales tax by 33 cents over two years, and applies a similar increase to the “floor stock tax” on other tobacco products such as snuff and snus.
In a narrow 70-67 vote that blurred party lines, the House elected to expand the tobacco excise tax to e-cigarettes and “other electronic or battery-powered devices, that contain and are designed to deliver nicotine or other substances into the body through inhaling vapor” that haven’t received FDA approval. The Senate must now concur with the House bill or it will go to a conference committee.
Under the bill, e-cigarettes would be subject to a per-unit excise tax at 46 percent, which is half the rate for regular cigarettes. The e-cigarette excise tax is expected to raise an additional $240,000, which lawmakers voted to put toward the Tobacco Trust Fund. That fund is struggling with declining revenue from the state’s settlement with tobacco companies.
The rest of the $12 million is raised by expanding the sales tax to include candy and soda, a measure opposed by Gov. Peter Shumlin. It also uses an expansion of the meals tax to vending machine food and drink.
House lawmakers also passed a ban on point-of-sale advertising for e-cigarettes as well as a ban on their use in public, at the workplace and in cars with children. The measures are aimed at creating “policy parity” between e-cigarettes and tobacco products, said primary sponsor Rep. Willem Jewett, D-Ripton.
Matt Trieber, D-Bellows Falls, urged his colleagues not to raise taxes when the anticipated $240,000 in revenue from the e-cigarette tax isn’t required to fund the underlying bill.
Rep. Heidi Scheuermann, R-Stowe, said the prohibition on using an e-cigarette in the car with children is too restrictive of civil liberties, and proposed that it be struck from the ban — a measure rejected by her colleagues.
Rep. Chris Pearson, P-Burlington, vice chair of the House Health Care committee, said the science around whether “secondhand vapor” is harmful is inconclusive, but the bans on usage are a prudent precaution.
The House voted to exclude “vape lounges” from the e-cigarette usage ban, so as not to close them down. Rep. Patti Komline, R-Dorset, who offered the amendment to protect the lounges, said, “If people want to vape in the company of other vapers, I think they should have at it.”
Local e-cigarette businesses have raised concerns about the impact of a tax and new regulations on their operations, saying that smaller companies are those likely to be most affected should they become law.
The bill, which derives from S.139, was also amended to direct the joint Committee on Health Care Oversight to review and consider the latest information on obesity in its deliberations while the Legislature is out of session. Another amendment requires the Tax Department to notify businesses about the products that will be added under the candy and soda sales taxes, or the business won’t be liable for paying them.
The $12 million investment is in Medicaid, exchange subsidies and the Blueprint for Health managed care program as well as several other smaller initiatives. The omnibus bill also contains a variety of policy initiatives as well as contingencies for the Vermont Health Connect exchange should it continue to underperform. More detail on those can be found here.
