More Vape Shops Face Bankruptcy Under ‘Incredibly Destructive’ Tax

Steve Birr | Vice Reporter

A survey of vape shops in Pennsylvania reveals up to 100 small businesses are anticipating bankruptcy under a 40 percent tax on vapor products in the state.

The wholesale tax on electronic cigarettes is already devastating the state’s once burgeoning vaping industry. The Pennsylvania Vaping Association says the tax is responsible for closing at least 120 stores since implementation last October. The stores that have remained opened are struggling to sustain their business operations under the heavy financial burden, reports Watchdog.org.

A survey recently conducted by the Pennsylvania Vaping Association of vape shop owners shows that another hundred stores are anticipating imminent closure if state lawmakers do not take action this year to overturn and replace the law, according to Watchdog.org on Wednesday. A bill has long been under review in the state legislature that would replace the wholesale tax with the 5-cent-per-milliliter sales tax on liquid nicotine; however, vaping advocates in the state say there is currently little momentum for reform.

Many officials in the state defend the tax, arguing the annual $13 million in promised revenue is desperately needed for the state. Critics, however, note that the tax is not economically sustainable, because annual revenue will diminish as more vape shops close their doors.

“The wholesale tax on vape shops was incredibly destructive to a very new industry,” Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation, told Watchdog.org. “In a sense, it was kind of a one-time fix. What’s more interesting is that you’re talking about entire life savings being wiped out.”

Lawmakers in Connecticut recently tired to implement a similar tax, but at a rate of 75 percent. Swift public backlash from health advocates and small business owners helped the vaping community mobilize after the tax was announced Sept. 8 as part of a budget compromise from Democratic Gov. Dannel Malloy.

Vaping advocates who feared the same fate as shops in Pennsylvania were ultimately successful in getting the measure removed from the final budget.

A growing body of medical evidence shows that vaping is a much safer alternative to smoking. Public health experts focused on harm reduction argue if government officials are serious about reducing the smoking rate in Pennsylvania they should be promoting instead of stifling the industry.

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