[A] key House committee on Tuesday unanimously approved a 92 percent wholesale tax on e-cigarettes, advancing an initiative aimed at curbing young people’s use of the devices.
The House Ways and Means Committee approved H.47 after hearing from several advocates who said there is a worsening “epidemic” of e-cigarette use among youth who don’t fully understand the risks of nicotine addiction.
Gov. Phil Scott has backed the tax. And his health commissioner, Dr. Mark Levine, told committee members that an e-cigarette tax can have the same effect as tobacco taxes.
“They have been very effective in reducing rates of adult and youth smoking,” Levine said.
But detractors say the tax will impede adults’ efforts to wean themselves off tobacco by using e-cigarettes. Gaetano Putignano, a vape shop owner from Bellows Falls, noted that the proposed tax includes e-cigarette liquids that don’t contain nicotine.
“Why would I be penalized for using a product with no nicotine?” Putignano asked lawmakers. “If we’re trying to tackle the youth vaping epidemic, I think we should look at our strategy here. I don’t think punishing adult Vermonters is the right strategy at all.”
The debate over e-cigarettes, which use heated liquid to deliver nicotine without burning tobacco, has intensified as the devices have gained popularity among young people. Though federal and state law forbids sale of the products to minors, officials say youth are getting e-cigarettes from older friends or online.
The U.S. Food and Drug Administration has taken additional regulatory steps in reaction to national statistics showing 3.6 million middle and high school students using e-cigarettes as of last year. That’s an increase of 1.5 million from the year prior.
Vermont’s latest Youth Risk Behavior Survey, from 2017, is less definitive on the topic. Current use of electronic vapor devices among Vermont high school students decreased from 2015 to 2017, though more students reported that they had tried e-cigarettes at some point.
Some say vaping among Vermont students likely is more prevalent than those statistics indicate because the 2017 survey happened prior to the explosive growth of Juul, a leading e-cigarette brand. “We think that those numbers are likely an underestimate of the reality,” said Jennifer Costa, Vermont government relations director for the American Cancer Society.
H.47 takes a taxation approach to the issue by imposing a 92 percent levy on “products sold as a tobacco substitute … including any liquids, whether nicotine-based or not, or delivery devices sold separately for use with a tobacco substitute.”
The tax is the same as that levied on “other tobacco products” under Vermont law.
According to a memo from the Joint Fiscal Office, the e-cigarette tax would generate about $850,000 in fiscal year 2020. That revenue could grow to $985,000 in fiscal 2021 and $1.1 million in fiscal 2022 “due to significant growth in the electronic cigarette industry,” the memo says.
The plan is to put that revenue into the state’s general fund. But Levine said that’s almost beside the point.
“I’m actually less worried about where the money goes, and more concerned about the fact that we price the product out of range, at least for youth,” he said.
In addition to the Health Department and American Cancer Society, the Vermont Medical Society also testified in support of the taxation bill. “For the medical society, the nicotine and brain development is one of the biggest concerns,” said Jill Sudhoff-Guerin, the society’s policy and communications manager.
A tax, she said, is one way to prevent youth from using e-cigarettes as a “gateway” to other tobacco products.
“We know that youth are extremely price-sensitive,” Sudhoff-Guerin said. “We’ve seen that with traditional tobacco taxes.”
But Putignano, who has pushed back against past attempts to regulate e-cigarettes, said raising the price of those devices will hurt small business and deter smoking-cessation efforts.
“We’re responsible adults … what I see here is an impact to adults, what you’re going to do to a small business, their employees and their customers,” Putignano said.
Asked what e-cigarette strategies he advocated instead of a tax, Putignano replied, “education, prevention, parenting.”
In spite of such objections, no committee member sought to derail the taxation bill.
Rep. Scott Beck, R-St. Johnsbury, proposed to amend the legislation so that it taxed liquid used in e-cigarettes but not the “delivery devices” used to inhale vapor. He said taxing those devices, which can be expensive, could serve as an “undue deterrent” to those who are trying to stop smoking traditional cigarettes.
“I’ve spoken to numerous people who say this is a device that they’ve used to get off of smoking,” Beck said.
Rep. George Till, D-Jericho and the bill’s primary sponsor, argued that delivery devices are “part of the health risk of these things.” And he said there’s no conclusive proof that large numbers of people use e-cigarettes to stop smoking altogether.
“They do have short-term benefits for some people,” Till said. “But the long-term benefits are really quite unproven.”
The committee voted seven to four against Beck’s amendment. Subsequently, all 11 members voted to advance the bill to the full House.
