April 8, 2015
“There is levied and collected a tax upon the sale, use, consumption, handling, possession, or distribution of all vapor products in this state equal to ninety-five percent of the taxable sales price.”
Yesterday I blogged about the Washington House Bill 1645 which moved out of committee on Tuesday. As bad as 1645 is, Senate Bill 5573 is even worse. Here are some of the “highlights” [emphasis added].
- “A person may not sell, offer for sale, or possess with intent to sell or offer for sale any flavored vapor product within the state.”
- “’Characterizing flavor’ means a distinguishable taste or smell related to fruit, chocolate, vanilla, honey, candy, cocoa, or dessert …‘Characterizing flavor’ does not include flavors related to menthol, wintergreen, or mint.”
- “Sample” means a tobacco product distributed to members of the general public at no cost or at nominal cost for product promotion purposes.
- “Unless preempted by federal law, no person may engage in the business of sampling tobacco products or vapor products.”
- “The department [Washington State Dept. of Health] must adopt a rule regulating the labeling and advertisement of vapor products. The rule must require a manufacturer … to label the vapor product with (i) Disclosure of the nicotine content of the vapor product, measured in milligrams per milliliter and verified by an independent laboratory certified by the board [Washington State Liquor Control Board]; and (ii) warning regarding the harmful effects of nicotine.”
- “By December 1, 2016, the department of health must submit a report to the governor and the appropriate committees of the legislature recommending whether the sale of vapor products with flavors other than those prohibited under section 113 of this act, such as menthol, mint, and wintergreen, should be prohibited.”
- “There is levied and collected a tax upon the sale, use, consumption, handling, possession, or distribution of all vapor products in this state equal to ninety-five percent of the taxable sales price.”
- “The moneys collected under this section must be deposited as follows: (a) Ninety percent into the state general fund; and (b) ten percent into the essential public health services account created in section 203 of this act.”
- “The department must use the moneys in the account for each of the three following purposes: (a) To fund essential governmental public health services; (b) to fund tobacco control and prevention and other substance use prevention and education; and (c) to use to strengthen and support public health system capabilities, including accredited higher education public health programs.”
- “Preexisting inventories of vapor products are subject to the tax imposed in section 202 of this act.”
The Bottom Line
- No flavored e-liquids = huge loss of incentive for smokers to consider a potentially safer vaping alternative. Big Tobacco – exempt.
- State regulation of advertising and labelling = the state will dictate what can be said, where it can be said and what information will be on all labels.
- Laboratory testing by State approved labs for nicotine content = the majority of small business owners could not possibly afford the testing. Big Tobacco – no problem.
- December 2016 deadline for Dept. of Health recommendation on including Big Tobacco flavors in prohibited flavors = the Senators have no need for a Dept. of Health recommendation on flavors affecting small businesses. Big Tobacco flavors – they need a DoH study and recommendation. No rush. Big Tobacco will have almost two years to lobby for the “correct” recommendation. Wonder what that will be?
- 95% sin tax on all vapor products = Washington has the sixth highest cigarette tax in the nation. The result? 48% of tobacco cigarettes smoked in the state are illegal contraband smuggled across state lines. The fourth highest inbound smuggling rate in the U.S. The Washington Dept. of Revenue estimates the resulting loss of tax revenue at $376 million per year. This bill amounts to a legislatively mandated black market for vaping products. “Break the law. It’s the law.”
- And where will the taxes go? 90% will go to the “General Fund”. 10% will to go to a new “Essential Public Health Services” account created by this bill. Apparently public health services were never considered “essential” for tobacco cigarettes?
SB 5573 is a public health disaster in the making.
Estimated tax revenue from this 95% sales tax – $96.5 million over the next four years – Auburn Reporter. 10% going to “Essential Public Health Services” – $9.6 million.
Washington’s State Funding for Tobacco Control for 2015: $1,850,000. State Tobacco Related Revenue: $619,900,000 – State of Tobacco.
Annual cost for smoking related healthcare in Washington – $651 million per year, $2.4 billion over the forecasted four year period.
Washington State smoking related deaths last year – 7,930 – Washington State Dept. of Health.
Small businesses, many of them family owned – destroyed. Jobs lost. Black market crime virtually guaranteed. Smokers will continue, or resume, smoking. And dying.
And Big Tobacco – it would have been cheap at twice the price. All in a day’s work. All in the name of – public health.
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Dave Coggin has a Master’s Degree in business and spent 35 years in corporate America. He is a co-founder and partner in DIYELS. He has spent the last five years actively researching and following the evolution of the e-cigarette industry. He is a strong proponent of e-cigarettes as the most promising option currently known for tobacco harm reduction. He may be contacted directly at email@example.com.
The opinions presented here are exclusively those of the author. Vaper’s Vortex is offered as a service to our customers and followers. Anyone considering e-cigarettes as an alternative to tobacco cigarettes should seek qualified advice from a medical professional.