Vermont bill (HB71) would tax e-cigarettes at 92% wholesale price

[Placebo Effect]

I was just alerted to this bill, which CASAA will be distributing a Call to Action for in the next few days.

The bill is currently in the House Human Services Committee.

The Vermont Legislative Bill Tracking System

Last year Rep. Bill Frank, one of HB71's two sponsors, previously introduced legislation to ban online sales of e-cigarettes. Thankfully, after the committee received numerous angry e-mails that the bill was going to be considered with little notice given to consumers, that provision was removed.

E-cigarette consumers in Vermont should e-mail CASAA at board@casaa.org.

 

[rothenbj]

These people seem to never stop. Why don't they tax skate boards, snow boards, skies and the like. There has been definite proof that there is a health risk with those products.

 

[the_vape_nerd]

if you live in that state it seems like it would be cheaper to maintain a p.o. box in a neighboring state and drive over once a month or so....such high idiocy...its only going to get worse

 

[2coils]

if you live in that state it seems like it would be cheaper to maintain a p.o. box in a neighboring state and drive over once a month or so....such high idiocy...its only going to get worse

Forget about living in another state...I wish I could buy an island and get away from all these crazy politicians!!

 

[zapped]

One word......precedent

If they can get this passed in Vermont they have a MUCH higher chance of getting congress to agree to an equally ridiculous tax increase nationwide.

 

[Littlewing]

Well, well, well... we are finally getting to the heart of this...

 

[zapped]

Forget about living in another state...I wish I could buy an island and get away from all these crazy politicians!!

Politicians are just a symptom of the people. Youre witnessing, or re-witnessing, the fall of Rome my friend. All the signs are there

 

[Petrodus]

Politicians are just a symptom of the people. You're witnessing, or re-witnessing, the fall of Rome my friend. All the signs are there

True ... but you do realize
when speaking out and telling the truth
you run the risk of being laughed at and being demonized
as some kind of radical conspiracy theorist.

 

[zapped]

True ... but you do realize
when speaking out and telling the truth
you run the risk of being laughed at and being demonized
as some kind of radical conspiracy theorist.

If thats the case, I'm in good company!

 

[zapped]

Shall I get the fiddle while you light the fire my friend? We can dance a jig as the 7 hills burn.

 

[Bill Godshall]

The good news is that there are only two cosponsors of the legislation.

This bill is extremely confusing, and if it does tax e-cigarettes at 92%, the authors did an excellent stealth job of hiding that impact.

The words "electronic cigarette" don't appear anywhere on the bill, there are three different definitions of "tobacco" products, and other parts of the bill involve MSA payments (indicating potential involvement by AG Sorrell) and updating the definition of smokeless tobacco products (that may have been urged by a tobacco company).

On page 8 of the HB 71, at http://www.leg.state.vt.us/docs/2014/bills/Intro/H-071.pdf
the current definition of "Tobacco products" in Vermont law 32 VSA 7702 (which the bill would change to "Other tobacco products") clearly appears to apply to e-cigarettes "any product manufactured from, derived from, or containing tobacco that is intended for human consumption by smoking, chewing or in any other manner; but shall not include cigarettes, little cigars, roll your own, snuff or new smokeless tobacco as defined in this section."

So what VT law does that current definition of "Tobacco products" (to be changed to "Other tobacco products") currently apply to?

Also, what does Vermont law 7 VSA 1001 (on page 1/2 of the bill) that redefines "Tobacco Products" currently apply to?
It doesn't appear to apply to the tax law, as it includes cigarettes (which aren't taxed at 92%).

The bill also would amend several laws pertaining to sales to minors and youth possession that use term "tobacco paraphernalia" and "tobacco substitutes", but I couldn't find any definitions for those terms. If e-cigs aren't considered paraphernalia or substitutes, than HB 71 wouldn't ban the sale of e-cigs to minors.

Also, did VT already ban e-cig sales to minors (as I recall NH did, but not sure if VT did so last year)?

According to CTFK's tax chart at
http://www.tobaccofreekids.org/research/factsheets/pdf/0169.pdf
VT currently taxes chewing tobacco, pipe tobacco and cigars at 92%, and snuff at $1.87/oz

 

[Insignificance]

One word......precedent

If they can get this passed in Vermont they have a MUCH higher chance of getting congress to agree to an equally ridiculous tax increase nationwide.

I don't see how a state doing it translates to Congress doing it.....I seriously doubt Representatives from Texas would vote on a Federal bill based on what Vermont does. Vermont has universal health care so they need to pay for it and smokers (yes, even vapors) are easy targets.

 

[Uncle Willie]

Most States need money .. cigs and anything that can be fitted into that catagory are an easy target .. maybe they should go for gasoline .. live in Chicago where $12.50 a pack of analogs is common ..

I myself have no problem with PV taxation .. after all, it's about healthier alternative, right .. ??

 

[Insignificance]

Thanks for the links, Bill.

I'm all for what tobaccofreekids is trying to accomplish, but if they really wanted to keep kids from starting smoking then they'd push the legal age to purchase cigs and other tobacco products to 21 just like with alcohol. Kids these days have told me that it's easier for them to acquire illegal drugs (like pot) than it is to get a 6-pack of beer. I'm not in favor of doing so but to me it's just a veiled excuse to levy more taxes, period.

 

[Placebo Effect]

To answer Bill Godshall's question:

Yes, VT did ban e-cigarette sales to minors last year. They defined them as "tobacco substitutes." We killed the portion of last year's bill that would've banned Internet sales.

The first 6 1/2 pages of the bill deal with the chapter of Vermont law that bans tobacco sales to minors. It also includes the Internet sales statute, but this legislation would not ban Internet sales of e-cigarettes -- The Vermont Statutes Online

Page 3 of the proposed law may be an issue for Vermont e-cigarette vendors, as it would require them to purchase their products from a 'licensed wholesale dealer.'

Page 7 of the proposed law begins the changes to Vermont's tax statute -- The Vermont Statutes Online

Section 7811 would be amended to tax e-cigarettes, as they would be defined as "other tobacco products" under 7702 and not specifically exempt by the statute (cigarettes, little cigars, roll-your-own tobacco, moist snuff, or new smokeless tobacco).

New smokeless tobacco products (which are taxed), by the way, are defined in current law as: "any tobacco product manufactured from, derived from, or containing tobacco that is not intended to be smoked, has a moisture content of less than 45 percent, or is offered in individual single-dose tablets or other discrete single-use units."

In short, this bill would tax e-cigarettes.

 

[antialiased]

From my reading, the bill would not tax e-cigarettes (defined under Vermont law as "Tobacco Substitutes" not as "Tobacco Products"), but would require a tobacco license for any retailer who sells them... which would impact a number of pharmacies and stores that don't sell tobacco products but do sell e-cigarettes. But I'm not admitted to the Vermont Bar, so don't take my word for it.

 

[Placebo Effect]

From my reading, the bill would not tax e-cigarettes (defined under Vermont law as "Tobacco Substitutes" not as "Tobacco Products"), but would require a tobacco license for any retailer who sells them... which would impact a number of pharmacies and stores that don't sell tobacco products but do sell e-cigarettes. But I'm not admitted to the Vermont Bar, so don't take my word for it.

I can tell you with 99% certainty that this does tax e-cigarettes.

Law as of now

There is hereby imposed and shall be paid a tax on all tobacco products except roll-your-own tobacco and little cigars taxed under section 7771...

Law under change

There is hereby imposed and shall be paid a tax on all other tobacco products, snuff, and new smokeless tobacco possessed in the state State of Vermont

...

The tax is intended to be imposed only once upon the wholesale sale of any tobacco product, snuff, and new smokeless tobacco and shall be at the rate of 92 percent of the wholesale price for all tobacco products except snuff, which shall be taxed at $1.87 per ounce...

And for the purposes of the tobacco tax chapter of the statute, 'tobacco product' would become 'other tobacco products'

(15) “Other tobacco products” means any product manufactured from, derived from, or containing tobacco that is intended for human consumption by smoking, chewing, or in any other manner; but shall not include cigarettes, little cigars, roll-your-own tobacco, moist snuff, or new smokeless tobacco as defined in this section.

The actual definition of "tobacco product" / "other tobacco product" is not changing. What's changing is that the tax statute used to specifically name the kind of 'tobacco products' that are taxed. Under this bill, any tobacco product that fit that definition (that isn't snuff, a new smokeless tobacco product, etc.) would be taxed at 92%.

Thus, the bill would tax e-cigarettes.

Seeing as how you are from Vermont, I hope you take swift action to get accurate information to these legislators.

 

[antialiased]

I can tell you with 99% certainty that this does tax e-cigarettes.
...
And for the purposes of the tobacco tax chapter of the statute, 'tobacco product' would become 'other tobacco products'



The actual definition of "tobacco product" / "other tobacco product" is not changing. What's changing is that the tax statute used to specifically name the kind of 'tobacco products' that are taxed. Under this bill, any tobacco product that fit that definition (that isn't snuff, a new smokeless tobacco product, etc.) would be taxed at 92%.

Thus, the bill would tax e-cigarettes. (emphasis mine)

Seeing as how you are from Vermont, I hope you take swift action to get accurate information to these legislators.

The bill would suck and would hurt a number of e-cig retailers (who don't have a tobacco license and wouldn't make the effort to get one just to carry e-cigarettes).

However, by legally defining e-cigarettes as "Tobacco Substitutes" the law implicitly asserts that e-cigarettes cannot be "Tobacco Products". A sugar substitute, by definition, is not a sugar product. Expressio unius est exclusio alterius.

And, as I'm from Vermont, have a doctorate in law, and rely on the e-cigarette industry for my livelihood, I can assure you that I have more to lose from any Vermont legislation regarding e-cigarettes than any other person. This legislation may be bad, but it isn't imposing a tax on e-cigarettes.

 

[Placebo Effect]

The bill would suck and would hurt a number of e-cig retailers (who don't have a tobacco license and wouldn't make the effort to get one just to carry e-cigarettes).

However, by legally defining e-cigarettes as "Tobacco Substitutes" the law implicitly asserts that e-cigarettes cannot be "Tobacco Products". A sugar substitute, by definition, is not a sugar product. Expressio unius est exclusio alterius.

And, as I'm from Vermont, have a doctorate in law, and rely on the e-cigarette industry for my livelihood, I can assure you that I have more to lose from any Vermont legislation regarding e-cigarettes than any other person. This legislation may be bad, but it isn't imposing a tax on e-cigarettes.

"Tobacco substitutes" and "other tobacco products" are defined separately in two entirely different sections of Vermont law. If they were two definitions within the same taxation statute, I'd agree with you.

If there is confusion between us (I have a JD / MBA by the way), imagine how the Vermont Department of Revenue could interpret the change. Plus, I can tell you that a large tobacco company believes that HB71 would tax e-cigarettes.

If you are from Vermont, educated, and make a living off the e-cigarette industry, I hope you'll be contacting your reps, the members of the committee, and be in attendance to speak out against this. At least ask for a clarification in the taxation section of the bill that says "For the purposes of this section, 'other tobacco products' shall not include 'tobacco substitutes' as defined by [citation to the part of the statute banning sales to minors that defines 'tobacco substitute']."

If you want to discuss privately, my e-mail is gconley@casaa.org.

 

[DJ RyckRak]

True ... but you do realize
when speaking out and telling the truth
you run the risk of being laughed at and being demonized
as some kind of radical conspiracy theorist.

"First they ignore you,
then- they laugh at you,
then- they persicute you,
then- you win.".....Mahatma Gandhiji