Ohio House Bill 64 Taxes Vapor Products as Cigarettes

[Johnivan69]

The newly submitted Ohio House Bill 64 proposes the following new tax on vapor products:

For the purposes of this section and section 5744.03 of the Revised Code, the "cigarette equivalent" of a vapor product shall equal one of the following amounts:
(1) If the vapor product is sold in liquid form, one-tenth of one milliliter of vapor product;
(2) If the vapor product is sold in a nonliquid form, one gram of vapor product.
​

With this bill Ohio is also attempting to increase the cigarette tax to 11.25 cents per cigarette. So taxes on e-liquid would be:

10 mL bottle equals 100 cigarettes, therefore a $11.25 tax
15 mL bottle equals 150 cigarettes, therefore a $16.88 tax
30 mL bottle equals 300 cigarettes, therefore a $33.75 tax

Add the sales tax (roughly 7.25%), and if a 15 mL bottle of e-juice costs $10.00:

Current: 15mL = $10 + $0.73 sales tax = $10.73 total
New: 15 mL = $10 + $16.88 cigarette tax = $26.88 + $1.95 sales tax = $28.83 total

Or a 269% increase in cost.

There appears to be no provision for exempting 0 mg e-juice.

Ohio, act now.

 

[SHOCK COLLAR]

thee O-snap! state

 

[Painter_]

At least they state the real reason for the tax.

Sec. 5743.63. (A) To provide revenue for the general revenue fund of the state, an excise tax is hereby levied on the storage, use, or other consumption of tobacco products

The house bill can be downloaded from here: http://search-prod.lis.state.oh.us/solarapi/v1/general_assembly_131/bills/hb64/IN?format=pdf

 

[caramel]

They want to encourage the use of high nicotine liquids.

 

[SHOCK COLLAR]

bathtub batches anyone? haven't these fools dun sum histery? prohibition dont werk. But ya'gotta Rplace 1 wit A nutter.

 

[sofarsogood]

I tried to open your pdf It's a junk file. 2700 pages..

This kind of tax is imposed on the wholesale level, meaning the retailer pays it regardless of whether the product sells. No retailer is going to stock hundreds of little bottles with that upfront cost that will turn over so slowly or not sell at all. The vape shops won't be selling this because they wlll go out of business. The remaining licensed tobacco resellers aren't interested even with no excise tax applied or they would be doing it already. This proposal is disengenuious because it won't collect any tax and the people who wrote the bill certainly know that.

What we are supposed to do now is panic and give money to legislators in return for them either supporting or not supporting this legislation which is proposed soley for the purpose of shaking us down for money. If all the vape shops closed I would expect a public uproar. But if that wouldn't happen the state will gladely ban vaping to preserve their tobacco business.

To make a ban like the above work there would need to be strong controls on mail order. Now we have a drug war that would cost more to wage than the taxes that won't be colleted but it might not cost more than the lost tobacco taxes.

 

[Painter_]

The pdf is the entire state budget.

 

[Bill Godshall]

It would be helpful if johnivan posted the page number(s) of HB 64 that apply to tobacco and vapor product taxes.

Reading through 2700 pages to find that section could take many hours or days.

 

[Bill Godshall]

The vapor tax section of HB 64 begins on page 2100.

 

[Bill Godshall]

"Vapor product" includes any product containing nicotine, regardless of concentration.

That sentence in HB 64 redefines eggplant, potatoes, tomatoes, cauliflower, green peppers, teas and spices as "vapor products", and the $.1125/gm tax on vapor products would impose a $252 tax on a 5lb bag of potatoes ($.1125 x 28gm/oz x16oz/lb x 5lbs = $252) and a $50.40 tax on 16oz jar of tomato sauce.

The Nicotine Content of Common Vegetables
MMS: Error
Dietary Contributions to Nicotine Body Burden
http://www.riskworld.com/abstract/1995/SRAam95/ab5aa174.htm
European Food Safety Authority proposes limits on nicotine in teas, herbs and spices
http://www.efsa.europa.eu/en/efsajournal/doc/2098.pdf

The rest of the definition of "vapor products" is very confusing, but appears to not apply to vapor products that "do not contain nicotine" (since they don't fit the first definition of a "vapor product").

"Vapor product" means a noncombustible product that contains or is made or derived from nicotine, that is intended and marketed for human consumption, including by smoking, inhaling, snorting, or sniffing, and that includes any component, part, or additive that is intended for use in a mechanical heating element, battery, or electronic circuit and is used to deliver the product.

 

[sofarsogood]

That sentence in HB 64 redefines eggplant, potatoes, tomatoes, cauliflower, green peppers, teas and spices as "vapor products", and the $.1125/gm tax on vapor products would impose a $252 tax on a 5lb bag of potatoes ($.1125 x 28gm/oz x16oz/lb x 5lbs = $252) and a $50.40 tax on 16oz jar of tomato sauce.

Is there anyplace that has high taxes, imposed at the wholesale level on vape shop e liquid and or devices like what is being being proposed by these bills? Is there anyplace we can look at for a model of what might happen? Any place in the world?

A wholesale tax means the retailer pays the tax even if the product does not sell. A sales tax is at point of sale so isn't paid unless the product sells. I'd bet a lot of shops have e liquid on consignment. That won't work with wholesale taxes. Similar problems would arise with devices and many more people would try to buy online so that would have to be prohibited, etc.

The cost of enforcing an online ban would probably be more than the e liquid tax could collect but it wouldn't collect anything if all the vape shops are gone. The tax collectors aren't stupid. They think about all this stuff. They can use harsh restrictions and taxes to effectively ban ecigs, sort of, but they can't collect enough tax to replace the cigarette tax no matter how they go about it and I think they know that.

 

[squee]

Is there anyplace that has high taxes, imposed at the wholesale level on vape shop e liquid and or devices like what is being being proposed by these bills? Is there anyplace we can look at for a model of what might happen? Any place in the world?.

Minnesota, 95% tax on wholesale price. It's been in effect for at least a year I think

https://www.revisor.mn.gov/statutes/?id=297F.05

 

[sofarsogood]

Minnesota, 95% tax on wholesale price. It's been in effect for at least a year I think

https://www.revisor.mn.gov/statutes/?id=297F.05

But then I recall someonen here saying it wasn't actually in force or only applied to cigalike cartridges or something like that.

 

[squee]

But then I recall someonen here saying it wasn't actually in force or only applied to cigalike cartridges or something like that.

E-cigarettes

 

[sofarsogood]

E-cigarettes

Okay, Minnesota has implmented the tax. I searched for vape shops. There seem to be quite a few and their websites are advanced. They seem prosperous. Based on the State page devices and 0 nic get no tax so I suppose someone could buy a flavor with 0 nic and add the nic at home. And the bare cost of production on basic e liquid is so low the distributors can absorb the cost of the tax and keep prices competitive. So if the other 50 states did no more or less than MN it might not be so bad for the shops and the vapors. It stlll seems a shame. A state that decides to encourage vaping may be could do some good for itself.

There are 50 states. Don't we have one governor who gets it and isn't afraid to say so?

 

[LiquidXT]

Where is the Casaa call to action on this? I'm definitely planning on doing whatever I can to stop this.

 

[warrior3995]

Well looks like gonna have sell 0mg juices and 10ml, 30ml bottles of high nicotine base juice 50 to 100 mg and tell people how many drops to add to there 0mg juice for desired nicotine level. That way they will only pay tax once but vape for months adding there own nicotine and yes dangerous as well, but it is that or pay the price to smoke even though it is not smoking, or everyone, every vendor refuse to comply and ignor the tax and don't pay but it has to be everyone

 

[hurricanegirl100]

Typical Ohio goverrnance. "Let's kill off our in-state Brick and Mortar stores with an outrageously high tax on e-juice and force our Ohio residents to buy their juice elsewhere"

Oh. Wait. Whuuuuuuut? You mean to tell us that people actually buy e-juice ONLINE??
Is there an Ohio government site where we can go to protest this tax?

 

[hurricanegirl100]

Representative Ryan Smith (R) - District 93 | The Ohio House of Representatives

Every Ohio vaper really needs to send this ..... an email and let him know what we think of his tax!
I just did!

 

[warrior3995]

How Wall Street Tobacco Deals Left States With Billions in Toxic Debt - ProPublica

“We are confident that we can stimulate demand,” Bear Stearns bankers told Ohio prior to a $5.5 billion tobacco bond package championed in 2007 by then state Treasurer Richard Cordray, who these days heads the U.S. Consumer Financial Protection Bureau.

Ohio’s tobacco deal was the largest ever. It included CABs that brought in $319 million in return for an eventual $6.6 billion balloon payment — a nickel on the dollar. Bear Stearns, Citigroup and other Wall Street firms made about $23 million in fees on the transaction, according to the bond offering document.