California Prop 56 - Hidden Vape Tax

[Katya]

And so it begins. Got an email from Apollo ecigs stating the following:

SAVE AN ADDITIONAL 10%

USE CODE: TAXGRAB

*sale valid from 3/20 - 3/31*

For anyone not aware, last year Proposition 56 passed in California, which created a tax on nicotine-containing vapor products. The tax rate is currently set at 27.3% and begins on April 1, 2017 but is likely to increase in July. The specific details of the tax and who collects it are complicated and change based on the situation, but long story short the price of e-liquids made and sold in California will be increasing across the board. If you would like more information please visit the Tax and Fee Guide for Cigarettes and Tobacco Products

 

[zoiDman]

And so it begins. Got an email from Apollo ecigs stating the following:

SAVE AN ADDITIONAL 10%

USE CODE: TAXGRAB

*sale valid from 3/20 - 3/31*

For anyone not aware, last year Proposition 56 passed in California, which created a tax on nicotine-containing vapor products. The tax rate is currently set at 27.3% and begins on April 1, 2017 but is likely to increase in July. The specific details of the tax and who collects it are complicated and change based on the situation, but long story short the price of e-liquids made and sold in California will be increasing across the board. If you would like more information please visit the Tax and Fee Guide for Cigarettes and Tobacco Products

Yeah... And so it begins.

BTW - Isn't the 27.3% applied to the Wholesale Price? So it will be Interesting to see what Consumers will have to Pay when they buy from Seller with a CA Presence.

 

[Katya]

Yeah... And so it begins.

BTW - Isn't the 27.3% applied to the Wholesale Price? So it will be Interesting to see what Consumers will have to Pay when they Buy from Seller with a CA Presence.

"The specific details of the tax and who collects it are complicated and change based on the situation ... "

 

[Lessifer]

Yeah... And so it begins.

BTW - Isn't the 27.3% applied to the Wholesale Price? So it will be Interesting to see what Consumers will have to Pay when they Buy from Seller with a CA Presence.

"The specific details of the tax and who collects it are complicated and change based on the situation ... "

Apollo is a manufacturer and retailer, right? So, what is the wholesale cost TO the manufacturer? I'm assuming they won't be paying a floor tax, because if they make a bottle of liquid and it is sold to someone in Nevada, the CA tax shouldn't apply, right?

 

[zoiDman]

April 1, 2017 ___ $0.1435/cigarette ($2.87/pack of 20s) ___ 27.30 % of wholesale cost

Tax Rates – Special Taxes & Fees Division

 

[Lessifer]

So... is Apollo a manufacturer, distributor, wholesaler, and retailer?

Tobacco Products Distributor
A tobacco products distributor is a person or company that makes the first distribution of tobacco products in this state. In general, distributors purchase tobacco products before any California tobacco products tax is due and then pay the tax when the tobacco products are sold or distributed. A tobacco products distributor is required to calculate the tobacco products tax due based on the wholesale cost of the tobacco products distributed and remit the amounts owed each month on tax return forms provided by the BOE. Anyone who distributes tobacco products in California must register with the BOE as a tobacco products distributor and sell only to distributors, wholesalers or retailers with a valid BOE cigarette and tobacco products license.

Cigarette and Tobacco Products Tax Law
CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
SECTION 30017


30017. Wholesale cost. "Wholesale cost" means the cost of tobacco products to the distributor prior to any discounts or trade allowances.


So... if they are the manufacturer, and the distributor, the cost to them is $0, so the tax is $0?

 

[zoiDman]

Apollo is a manufacturer and retailer, right? So, what is the wholesale cost TO the manufacturer? I'm assuming they won't be paying a floor tax, because if they make a bottle of liquid and it is sold to someone in Nevada, the CA tax shouldn't apply, right?

I Think that Apollo eCigs has a CA Presence. So CA Taxes on sales Inside of CA would need to be collected by Apollo.

How much that Tax would be would be Based on the Wholesale Price of the Product sold. But here is the Problem.

If there is No 3rd Party that I am selling e-Liquids to (like a Distributor) at a Wholesale price, I don't know what Basis I should use to apply the 27.3%?

Cost of Goods Sold?

 

[zoiDman]

...

So... if they are the manufacturer, and the distributor, the cost to them is $0, so the tax is $0?

I think I found it...

"...

(2) If a manufacturer or an importer is also the distributor, the wholesale cost of tobacco includes all manufacturing costs, the cost of raw materials (including waste materials not incorporated into the finished tobacco product) prior to any discounts or trade allowances, the cost of labor, any direct (including freight-in) and indirect overhead costs, and any federal excise and/or U.S. Customs taxes paid. Wholesale cost includes all freight or transportation charges for shipment of materials and/or unfinished product from the supplier to the manufacturer concurrently licensed as a distributor, but excludes domestic freight or transportation charges for shipment of finished tobacco products as defined in subdivision (a)(3).

..."

Cigarette and Tobacco Products Tax Regulations - Reg. 4076

 

[Lessifer]

I think I found it...

"...

(2) If a manufacturer or an importer is also the distributor, the wholesale cost of tobacco includes all manufacturing costs, the cost of raw materials (including waste materials not incorporated into the finished tobacco product) prior to any discounts or trade allowances, the cost of labor, any direct (including freight-in) and indirect overhead costs, and any federal excise and/or U.S. Customs taxes paid. Wholesale cost includes all freight or transportation charges for shipment of materials and/or unfinished product from the supplier to the manufacturer concurrently licensed as a distributor, but excludes domestic freight or transportation charges for shipment of finished tobacco products as defined in subdivision (a)(3).

..."

Cigarette and Tobacco Products Tax Regulations - Reg. 4076

Well, that's crystal clear. I still wonder WHEN they're supposed to pay it. If a retailer in CA orders wholesale, I think they're supposed to pay it. If apollo sells direct to a consumer in CA, apollo pays it. If they sell to anyone outside of CA, it doesn't get paid. I think. "Complicated" is a fair assessment IMO.

 

[zoiDman]

Well, that's crystal clear. I still wonder WHEN they're supposed to pay it. If a retailer in CA orders wholesale, I think they're supposed to pay it. If apollo sells direct to a consumer in CA, apollo pays it. If they sell to anyone outside of CA, it doesn't get paid. I think. "Complicated" is a fair assessment IMO.

Welcome to the Wonderful and Wacky World on the CA BOE.

"Where you can get In. But it is Hard to get Out."

LOL

 

[Lessifer]

Welcome to the Wonderful and Wacky World on the CA BOE.

"Where you can get In. But it is Hard to get Out."

LOL

Tobacco products have this whole system and network that already exists. The gas station doesn't buy cigarettes directly from Camel, they buy from a distributor.

Money grubbers.

It still bugs me that outside of this thread, I never see anything about this, anywhere...

 

[zoiDman]

...

It still bugs me that outside of this thread, I never see anything about this, anywhere...

No Argument there Les. But why Limit it to Just this Thread?

I don't hear much about Any Tax Issues anymore. With the Exception of Bill G's newsletter.


Taxation


New Mexico Senate approves bill (SB 231) to impose 76% tax on vapor products, increase cigarette tax from $1.66 to $3.16/pack, increase OTP tax from 25% to 76% http://www.charlotteobserver.com/news/article137086668.html

https://www.nmlegis.gov/Legislation/Legislation?Chamber=S&LegType=B&LegNo=231&year=17


Kansas Senate rejects Gov. Brownback’s proposed tobacco tax increases http://www.washingtontimes.com/news/2017/mar/7/kansas-lawmakers-consider-hiking-tobacco-taxes-in-/


Kansas Senate Assessment and Taxation Committee amends, recommends passage of bill (SB 130) to change vapor e-liquid tax from $.20/ml to $.05/ml http://kslegislature.org/li/b2017_18/measures/sb130/

http://www.kslegislature.org/li/b2017_18/measures/documents/cr_2017_sb130_s_1327.pdf

CASAA asks Kansas vapers to urge legislators to support and enact SB 130 http://casaa.org/call-to-action/kansas-take-action-to-change-the-tax-on-vapor-products/


After NY State Health Commissioner Zucker sends letter to all MDs in NY that grossly misrepresents the evidence on vapor products and urges their support for Gov. Cuomo’s proposed $.10/ml tax on e-liquid, R Street sends letter responding to Zucker .

http://www.rstreet.org/outreach/concerned-healthcare-providers-respond-to-new-york-department-of-health-commissioners-remarks-on-e-cigarettes/


NY Conservative Party: Block Tax on E-cigarettes http://www.nystateofpolitics.com/2017/03/conservative-party-block-tax-on-e-cigarettes/


PA Rep. Jeff Wheeland to proposed bill to change PA’s 40% vapor tax to $.05/ml

http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20170&cosponId=22325

PA Sen. Camera Bartolotta to proposed bill to change PA’s 40% vapor tax to $.05/ml

http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20170&cosponId=22722

CASAA urges PA vapers to send letters of support for bills to tax e-liquid at $.05/ml http://p2a.co/fYelf6m


CASAA urges MN vapers to oppose bill (SF 1052) backed by Reynolds to impose $.30/ml tax on e-liquid.

http://casaa.org/call-to-action/minnesota-oppose-a-tax-hike-on-vaping/


Frank Chaloupka points out that raising cigarette tax benefits health and economy (OK) http://journalrecord.com/2017/03/03/chaloupka-dont-trust-tobacco-industry-on-cigarette-taxes/


UK Government to increase taxes and duties on cigarettes http://www.dailymail.co.uk/news/article-4295694/Smokers-face-double-whammy-tax-increases.html

https://www.ft.com/content/66e5891e-0410-11e7-ace0-1ce02ef0def9


Philip Morris Limited (PMI’s subsidiary in UK) urges British government to slightly increase cigarette tax to purportedly encourage smokers to switch to less harmful smokefree alternatives, but PML opposes any substantive cigarette tax increase.

https://www.pmi.com/resources/docs/default-source/default-document-library/taxing-tobacco-and-the-budget-views-of-philip-morris-limited.pdf

http://www.telegraph.co.uk/news/2017/03/03/tax-us-worlds-biggest-cigarette-maker-tells-philip-hammond/

Ironically, in 2015, Philip Morris Limited vehemently opposed a UK cigarette tax increase, and instead urged the UK government to tax vapor products (see page 290) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/464795/PU1814_Tobacco_Levy_final_v3.pdf


BAT opposes minimum excise tax on cigarettes in UK, claims it will hurt low http://www.cityam.com/260221/minimum-excise-tax-cigarettes-hurt-lower-earners-and-fuel

 

[Lessifer]

No Argument there Les. But why Limit it to Just this Thread?

I don't hear much about Any Tax Issues anymore. With the Exception of Bill G's newsletter.


Taxation


New Mexico Senate approves bill (SB 231) to impose 76% tax on vapor products, increase cigarette tax from $1.66 to $3.16/pack, increase OTP tax from 25% to 76% http://www.charlotteobserver.com/news/article137086668.html

https://www.nmlegis.gov/Legislation/Legislation?Chamber=S&LegType=B&LegNo=231&year=17


Kansas Senate rejects Gov. Brownback’s proposed tobacco tax increases http://www.washingtontimes.com/news/2017/mar/7/kansas-lawmakers-consider-hiking-tobacco-taxes-in-/


Kansas Senate Assessment and Taxation Committee amends, recommends passage of bill (SB 130) to change vapor e-liquid tax from $.20/ml to $.05/ml http://kslegislature.org/li/b2017_18/measures/sb130/

http://www.kslegislature.org/li/b2017_18/measures/documents/cr_2017_sb130_s_1327.pdf

CASAA asks Kansas vapers to urge legislators to support and enact SB 130 http://casaa.org/call-to-action/kansas-take-action-to-change-the-tax-on-vapor-products/


After NY State Health Commissioner Zucker sends letter to all MDs in NY that grossly misrepresents the evidence on vapor products and urges their support for Gov. Cuomo’s proposed $.10/ml tax on e-liquid, R Street sends letter responding to Zucker .

http://www.rstreet.org/outreach/concerned-healthcare-providers-respond-to-new-york-department-of-health-commissioners-remarks-on-e-cigarettes/


NY Conservative Party: Block Tax on E-cigarettes http://www.nystateofpolitics.com/2017/03/conservative-party-block-tax-on-e-cigarettes/


PA Rep. Jeff Wheeland to proposed bill to change PA’s 40% vapor tax to $.05/ml

http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20170&cosponId=22325

PA Sen. Camera Bartolotta to proposed bill to change PA’s 40% vapor tax to $.05/ml

http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20170&cosponId=22722

CASAA urges PA vapers to send letters of support for bills to tax e-liquid at $.05/ml http://p2a.co/fYelf6m


CASAA urges MN vapers to oppose bill (SF 1052) backed by Reynolds to impose $.30/ml tax on e-liquid.

http://casaa.org/call-to-action/minnesota-oppose-a-tax-hike-on-vaping/


Frank Chaloupka points out that raising cigarette tax benefits health and economy (OK) http://journalrecord.com/2017/03/03/chaloupka-dont-trust-tobacco-industry-on-cigarette-taxes/


UK Government to increase taxes and duties on cigarettes http://www.dailymail.co.uk/news/article-4295694/Smokers-face-double-whammy-tax-increases.html

https://www.ft.com/content/66e5891e-0410-11e7-ace0-1ce02ef0def9


Philip Morris Limited (PMI’s subsidiary in UK) urges British government to slightly increase cigarette tax to purportedly encourage smokers to switch to less harmful smokefree alternatives, but PML opposes any substantive cigarette tax increase.

https://www.pmi.com/resources/docs/default-source/default-document-library/taxing-tobacco-and-the-budget-views-of-philip-morris-limited.pdf

http://www.telegraph.co.uk/news/2017/03/03/tax-us-worlds-biggest-cigarette-maker-tells-philip-hammond/

Ironically, in 2015, Philip Morris Limited vehemently opposed a UK cigarette tax increase, and instead urged the UK government to tax vapor products (see page 290) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/464795/PU1814_Tobacco_Levy_final_v3.pdf


BAT opposes minimum excise tax on cigarettes in UK, claims it will hurt low http://www.cityam.com/260221/minimum-excise-tax-cigarettes-hurt-lower-earners-and-fuel

We accept the leash in the hopes of avoiding the lash, all the while forgetting we once were free.

 

[zoiDman]

We accept the leash in the hopes of avoiding the lash, all the while forgetting we once were free.

I don't think so.

I think the Vast Majority of Vaper's Action/Choice is thru Inactions and not Voicing their Choice. Because Most Don't Know. And the Majority of the Few who do Don't Care.

 

[Lessifer]

I don't think so.

I think the Vast Majority of Vaper's Action/Choice is thru Inactions and not Voicing their Choice. Because Most Don't Know. And the Majority of the Few who do Don't Care.

How many times have you read "I'd be okay with paying a tax, as long as they left the rest of it alone."? There are plenty of vapers who see vaping as smoking-lite.

I do agree that most just don't know. By some estimates there are millions of vapers in America. If those numbers could be mobilized...

I'm glad I found vaping when I did. I hope I don't see its early demise.

 

[Katya]

I have a headache...

 

[Katya]

So... is Apollo a manufacturer, distributor, wholesaler, and retailer?

Beats me. I ordered from them once, several years ago, because I was on a quest for the ultimate RY4 and @billherbst of the famous RY4 Mega Thread gave Apollo's RY4 a high rating. I was really surprised that I'm still on their list...

 

[Katya]

We accept the leash in the hopes of avoiding the lash, all the while forgetting we once were free.

As a dog person, I strongly object to this analogy. Every dog I knew loved his/her leash because a leash means a walk!

As a horse woman, well, that's a different story. I loved my horses to death, but I was never convinced that they loved me back and actually enjoyed having me on their backs. I have a feeling that horses do remember being free...

 

[Lessifer]

Beats me. I ordered from them once, several years ago, because I was on a quest for the ultimate RY4 and @billherbst of the famous RY4 Mega Thread gave Apollo's RY4 a high rating. I was really surprised that I'm still on their list...

I think I ordered a couple bottles from them once, during a sale. They're based near-ish to me. I know they manufacture, and they obviously retail, I have no idea if they distribute. The point being that vapor products don't fit into the neat categories that already exist for tobacco products.

 

[Lessifer]

As a dog person, I strongly object to this analogy. Every dog I knew loved his/her leash because a leash means a walk!

As a horse woman, well, that's a different story. I loved my horses to death, but I was never convinced that they loved me back and actually enjoyed having me on their backs. I have a feeling that horses do remember being free...

I'll admit I got caught up in the alliteration though I wasn't picturing animals when I wrote it.

It just seems to me that we(general we, not specifically us) have always been jumping at the chance to "compromise" even though we've never been offered anything in return.