New Vaping Tax

[cmichaels]

Alert all vapers: Bad Rhode Island tax proposal

My communications firm represents a new group, Vapers United  We have long worked on vapor policy issues and we’ve identified a really bad Rhode Island vape tax proposal that could have bad implications for vapers inside and outside of Rhode Island.

The short version: Rhode Island's state revenue bill contains a provision imposing an 80% wholesale tax on vaping equipment and liquid. See pages 33-34 here (http://webserver.rilin.state.ri.us/BillText18/HouseText18/Article-004.pdf), and the definitions preceding these sections.

This is a big deal, and not just for Rhode Islanders, for a couple reasons:

1) One of the country’s biggest vapor product companies is located in Rhode Island  If they stay there, this bill will adversely harm them, and probably by extension, many vapers outside of Rhode Island. If they leave, which we assume they will, it’ll be better for vapers but bad for Rhode Island because not only will they not get the money they’re seeking from this tax, they’ll also lose employees, consumers and taxpayers. This is a huge reason why the tax proposal is misguided and dumb.

2) Consumption taxes on tobacco and tobacco-like products (including e-cigs) rarely bring in the revenue projected, and that’s especially been the case in Rhode Island because it’s such a small state and people will just drive to Massachusetts, Connecticut or New Hampshire to buy products that are over-taxed in Rhode Island. Here are a few things worth reading relevant to this, and which underline how dumb this proposal is, not just for vapers, but for Rhode Island itself:

- Tax Foundation study on how high cig taxes have driven smuggling, specifically citing Rhode Island. https://taxfoundation.org/new-study-high-excise-taxes-drive-cigarette-smuggling-boston-new-york-providence/

- Mackinac Center study that emphasizes that where the divergence between consumption tax rates between neighboring states is lower, states collect more revenue than where there’s a big difference. Rhode Island’s cigarette tax collections increased when Massachusetts raised its cigarette taxes. http://www.mackinac.org/archives/2016/s2016-09.pdf

- Tax Foundation publication which underlines that a bunch of states nearby to Rhode Island do not have vape taxes, while Rhode Island is proposing a particularly large and punitive one. https://taxfoundation.org/vapor-taxes-2017/

3) My boss and her husband say vaping was the only pathway that worked for them to quit smoking. I’m guessing others here have had the same experience. Imposing a high excise tax on vapor arguably incentivizes more smoking and less switching to vaping, which is a questionable public policy outcome.

You can get further information via Vapers United (https://vapersutd.com/) — they are planning to send email updates as this bill proceeds to people on their list, and we may post some here, too.