Category: Taxation

Colorado Raises Taxes on E-Cigarettes and Vapor Products

Credit: Neonbrand
Colorado voters have passed a measure that will raise the tax on e-cigarettes and vapor products at 30 percent starting in 2021 and go up to 56 percent starting in July 2024.
Proposition EE’s is estimated to raise up to $250 million in revenue this fiscal year and next.
Passage of the measure also adds price floors for tobacco products. The minimum price for moist snuff products will be $1.48 per container and will increase to $2.26 by 2027.
The measure was referred to Colorado voters by state lawmakers as part of HB20-1427 as the state tries to address its high teen vaping rates and other tobacco and nicotine use.The added revenue is allowed to be spent on a new cash fund for rural schools, preschool funding, tobacco education programs, housing and health care.
November 4, 2020
Oregon Voters Approve 65% Wholesale Tax Hike on Vapor
A measure in Oregon that places a 65 percent tax on the wholesale cost of vapor products has passed.
According to an article on KDRV.com, Measure 108 increases taxes on all tobacco products, especially “inhalant delivery systems,” namely e-cigarettes, and puts the money toward health programs under the Oregon Health Authority umbrella.
The measure increases tobacco taxes at the following rates:

Cigarette tax at 16.65 cents per cigarette, which is an increase from $1.33 to $3.33 per 20-pack of cigarettes;

E-cigarettes and other nicotine inhalants at a rate of 65 percent of the wholesale sales price; and

Cigar tax cap of 65 percent of the wholesale sales price, not to exceed $1.00 per cigar, an increase from $0.50.

With over 67 percent of precincts reporting, almost 67 percent of voters favored the measure, with just over 33 percent against.
“This is a great victory for public health and tobacco control efforts in Oregon that will save thousands of lives and reduce the devastating toll of tobacco use on our families and communities. Tobacco use is the leading cause of preventable death, but with this vote, Oregonians have taken a critical step forward,” said Jamie Dunphy, Oregon government relations director for the American Cancer Society’s Cancer Action Network.
November 4, 2020
Baltimore City Council Wants Vapor Tax for Money Woes

Credit: ActionVance
Baltimore City Council wants to place a tax on e-cigarettes as a way to boost revenue as the coronavirus pandemic continues to devastate the city’s economy.
Council President Brandon Scott introduced a bill Monday night to establish a 30 percent excise tax on the distribution of electronic smoking devices, including e-cigarettes, e-hookahs and vape pens. He says the move would also discourage smoking, according to an article in The Baltimore Sun.
“We have to be sure we are treating these kinds of devices like we treat regular cigarettes,” said Scott, who is the Democratic nominee for mayor.
Scott said it’s essential to look for new revenue streams. The pandemic has hammered Baltimore’s economy, forcing the city to withdraw up to $25 million from its Rainy Day Fund.
Baltimore County to join other Maryland counties suing e-cigarette maker »
The finance department will perform an analysis to determine how much the tax could bring in.
The council’s taxation and finance committee, chaired by Councilwoman Sharon Green Middleton, will consider the bill.
October 20, 2020
Health Group Wants Irish Leaders to Impose E-Cig Tax

Credit: Diogo Palhais
The Irish Heart Foundation (IHF) wants the Irish government to impose an excise tax of $.06 per millilitre of e-liquid. It is expected to add a possible 10-25 percent to the consumer’s price.
The IHF is also asking that the budget increase the price of the most popular price category of cigarettes from €13.70 to €20 through a series of annual tax increases. Chris Macey, head of advocacy at the IHF, said that a larger tax increase on tobacco would help deter vapers from switching back to smoking.
Macey argued that branding that features cartoon characters, flavors such as cotton candy and bubblegum, paired with aggressive marketing tactics on social media platforms used by teenagers, show this claim is “preposterous.”
Macey added that studies showed that tax increases on e-cigarettes had proven to be effective in reducing youth use.
October 10, 2020
Colorado Measure Would Raise Vapor Tax Over 7 Years

Cigarettes and tobacco products are taxed in Colorado. Vaping devices and vaping fuel are not.
A question on the November ballot — Proposition EE — would change that system, increasing the price of cigarettes and all other nicotine and tobacco products gradually over the next seven years.
The Colorado legislature passed legislation in the 11th hour of the the recent lawmaking term to place the question on the ballot. The bill was negotiated between Democratic lawmakers, Gov. Jared Polis’ office, health advocates and the Altria Group, according to an article on the coloradoan.com
Proponents see Proposition EE as a way to drive down tobacco use in Colorado — including teen vaping. And on top of that, they want the money raised through the tax to go toward funding preschool slots across the state. Opponents say the tax increase is regressive and will hurt smokers and tobacco users who are minorities and have lower incomes.
If passed, it would be the first tobacco tax increase in Colorado since 2004, when voters approved an additional 3.2 cents in taxes per cigarette. Today, there is an 84-cent tax on each pack of cigarettes and a 40 percent tax on the manufacturer’s list price for other tobacco products, like chewing tobacco, cigars and snuff.
September 28, 2020
Korea to Double Down on E-Liquid Taxes in 2021

Credit: Brady Bellini
The Korean government said Wednesday that taxes on e-liquids will nearly double starting next year. The “health promotion tax” on nicotine solutions will be raised from the current WON525 (0.45 cents) to WON1,050 a milliliter, according to a story in the Korea Herald.
The changes to the national health promotion laws were approved by the Cabinet recently, according to the Ministry of Health and Welfare, which are set to come into effect Jan. 1, 2021.
Ministry officials said the revisions are intended to achieve a fairer taxation on varying types of tobacco products. Currently, the tax rate for e-cigarettes is only 43 percent of that for conventional cigarettes.
The ministry warns against the use of e-cigarettes or vaping products, citing global instances of lung injuries associated with their use. The first local case of a suspected illness linked to vaping was reported in October last year.
September 23, 2020
South Korea Set to Double E-liquid Taxes in 2021

Credit: Shawn Ang
South Korea’s Ministry of Health and Welfare (MOHW) said it would double the national health promotion tax on e-liquids for electronic cigarettes. The health tax for e-liquid is currently won525 ($0.46) per milliliter of nicotine solution. It will jump to won1,050, on Jan. 1, 2021.
The increase is in keeping with other tax hikes, including special tobacco consumption tax, according to an article in the Korea Biomedical Review. Cigarettes manufactured using parts other than the leaves of tobacco, which currently are not subject to taxation, will also be included in the health promotion tax.
Cigarettes made and stockpiled before the amendment come into effect will also be subject to the new health, to keep makers from making inventory profits.
The health authorities will listen to public opinions during the legislative notice period and finalize the proposal. It will submit the amendment to the National Assembly after undergoing a regulatory and legislative review, according to the article.
August 19, 2020
Vapor Excise Taxes in Kentucky Take Effect Aug. 1

E-cigarettes are the only tobacco product sold in Kentucky that is not subject to an excise tax. That changes Saturday.
Earlier this year, Kentucky lawmakers approved House Bill 351 that included an excise tax on vapor products. In addition to the state’s 6 percent sales tax, an excise tax will be imposed on closed and open vaping systems, according to Kentucky.com. Kentucky will now charge $1.50 on each closed cartridge or pod and 15 percent of the actual price for which the distributor sells an open system.
The new excise tax on vaping products is expected to generate about $7.9 million for the state this fiscal year and slightly more in coming years since the tax did not start on July 1, the beginning of this fiscal year.
July 28, 2020
Colorado Voters to Decide on Nicotine Tax in November

Photo: Yekophotostudio | Dreamstime.com
Voters in Colorado will make the decision on whether to raise taxes on nicotine products in November. The Centennial State’s governor, Jared Polis, signed legislation on Wednesday referring a question to the statewide ballot.
“Colorado voters will have a really important opportunity this November to say it’s time that Colorado no longer be the top state for teen vaping,” Polis said, according to an article thecentersquare.com. “It’s time that we help make sure that less kids get hooked on nicotine, a habit that is hard to kick and often stays for life and will shorten their lives.”
Polis added the measure would be “an extra boost for smoking cessation programs.” Voters must approve the measure under the state’s Taxpayer’s Bill of Rights (TABOR) because it includes a proposed tax increase, according to the article.
A fiscal note for the legislation says the measure, if approved, would bring in $82.7 million in fiscal year 2020-21, and $167.6 million in fiscal year 2021-22.
Revenue from the tax increases would go toward the State Education Fund, Rural Schools Fund, a preschool program, tobacco education programs, and a health care fund.
Last year, a measure to increase taxes on tobacco and nicotine products that had Polis’ backing didn’t make it through the legislature.
July 9, 2020
UKVIA Wants Tax Parity With NRTs for Vapor

A vapor industry advocacy group is calling for the UK government to consider a similar VAT rate for vaping that currently applies to nicotine replacement therapies (NRT). The UK Vaping Industry Association (UKVIA) is calling upon government as the Chancellor of the Exchequer is widely reported to be looking at reducing the VAT rates in the wake of the coronavirus as the Government last did during the 2008 economic downturn, according to a press release.
In a letter to the Chancellor of the Exchequer, Rishi Sunak, the UKVIA urges the government to consider a level playing field in regard to the VAT rate between NRT and vaping products, to support adult smokers who would otherwise not quit smoking to make the switch to vaping, the release states.
The letter points to the recent Public Health England (PHE) Vaping in England Report that found that when vaping products were used in an attempt to quit, either alone or with licensed medication, success rates were comparable to, if not higher than, NRTs alone.
The current VAT chasm between NRT products (5 percent) and vaping (the full 20 percent VAT and the same as conventional cigarettes) despite the fact that e-cigarettes, whilst not considered a cessation product, have significant potential to have a positive impact on public health. “This is backed up by research commissioned by the NHS last year which revealed that e-cigs are twice as effective as nicotine patches, gum or sprays for quitting smoking,” according to the release.
John Dunne, director at UKVIA, said the vaping sector has been a “major retail success story this century and is playing a major role in getting smokers to quit, thereby helping cut the huge annual cost of healthcare” that is often associated with smoking.
“Yet according to research nearly 1 in 10 smokers do not switch to e-cigarettes because they considered them to cost too much,” he said. “Ensuring that the price of vaping products remains much lower than cigarettes is vitally important in continuing to encourage the some 7m smokers in the UK, who otherwise do not quit, to make the switch.”
He goes on to explain that the UK is still in the recovery phase of Covid-19 and a significant VAT reduction for vape products would pay back both economically and from a healthcare perspective.
“A VAT rate for vaping on par with NRT would also support the call in the recent PHE report for smokers to be encouraged to try regulated nicotine vaping products along with smoking cessation medications and behavioural support to increase their chances of successfully stopping smoking,” he said.
July 2, 2020