Since HP 950 doesn't mention or define e-cigarettes, its quite possible that some/most/many/all of the bill's sponsors aren't aware the bill would tax e-cigarettes.
Had the sponsor(s) intended for the bill to apply to e-cigarettes, they would have created another category for e-cigarettes, and would have included "e-cigarettes" in the definition of "tobacco products".
But the bill's proposed change in the definition of "tobacco product" (which is the same as the FSPTCA's definition) would clearly apply to tax to all types of e-cigarettes products.
"products containing, made or derived from tobacco that are intended for human consumption by any means, or any components, parts or accessories of tobacco products, including, but not limited to"
The current tobacco tax rates in Maine are as follows:
Cigarettes - $2/pack
Smokeless Tobacco - $2.02/ounce
Cigars - 20% of wholesale price
Pipe Tobacco - 20% of wholesale price
HP 950's proposed new tax rates are extremely confusing (and I've worked on tax legislation for 22 years), as it is unclear if some of the new tax rates (e.g. for e-cigarettes, most smokeless tobacco products & premium cigars) would be taxed ad valorem (i.e. % of wholesale price) and if their tax rate will be based upon the actual cigarette tax rate (i.e. $2/pack) or its equivalent ad valorem rate.
2-A. Other tobacco. Beginning October 1, 2013, a tax is imposed on tobacco products at a tax rate based on the wholesale sales price of the tobacco products that is equivalent to the rate of tax imposed on a pack of 20 cigarettes in chapter 703 expressed as a percentage of the average wholesale sales price of a pack of 20 cigarettes as determined by the State Tax Assessor or, if the following rate is higher, at the following rate:
A. On cigars with a retail price of less than $2.50 per cigar, the amount of the total tax on a pack of 20 cigarettes established by chapter 703 per package of 4 cigars, with a proportionate tax for any package or quantity of cigars consisting of fewer or more than 4 cigars;
B. On loose tobacco, the amount of the total tax on a pack of 20 cigarettes established by chapter 703 per 0.65 ounces;
C. On little cigars, the amount of the total tax per cigarette established by chapter 703 per little cigar; and
D. On single-unit tobacco products, the amount of the total tax per cigarette established by chapter 703 per single-dose or single-use unit of the single-unit tobacco product.
It appears that HP 950 would establish the following tax rates:
Large Cigars under $2.50 - 25% (i.e. $.50) of the tax on a cigarette pack
Loose Tobacco (i.e. pipe tobacco and perhaps RYO) - $2/.65 ounces = $3/ounce
Little Cigars - $.10/cigar = $2/pack (same as cigarettes)
Single Unit Product - $.10/unit
But its unclear exactly what the new tax rates would be (or how they'd be determined) for e-cigarette products, most smokeless tobacco products (i.e. those not sold in single units) and Premium Cigars (those costing over $2.50).
I strongly suspect RJ Reynolds, Philip Morris and Lorillard are opposing HP 950 (because of the tax on e-cigs and tax hikes on single unit snus, snuff and dissolvables).
We need to either kill the bill, or get an amendment offered to exempt e-cigarettes from the definition of tobacco products.
An effective argument to make against the bill is that it will shift e-cigarette sales in Maine from brick-and-mortar retailers in the state to out-of-state vendors who sell over the Internet (who wouldn't be subject to the tax, and who are outside the reach of Maine Revenuers).
