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Vermont Votes To Drop 92 Percent E-Cigarette Tax Bombshell

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Guy Bentley Research Associate, Reason Foundation
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Vermont is considering a bill that would slap a 92 percent tax on e-cigarettes and vapor products.

Introduced by Democratic state Rep. George Till, the bill would treat e-cigarettes and vapor products the same as tobacco, meaning an eye-watering 92 percent tax increase.

After furious debate on the House floor, the bill won preliminary approval Wednesday with a vote of 83-54. The bill will now proceed to the Senate.

Till’s reasoning for the draconian tax increase is the upswing in the number of young people vaping. Till argued minors would be especially sensitive to sharp price rises and would be deterred from buying e-cigarettes.

“The e-cigarette tax is a really good idea for a lot of many reasons,” Jill Sudhoff-Guerin of the American Cancer Society told WPTZ News. “The primary reason is that kids are very price-sensitive.”

Opponents of the tax warned major price increases will discourage smokers from switching to e-cigarettes, which according to Public Health England are 95 percent safer than tobacco rivals.

Four states the District of Columbia and several localities have already passed some form of e-cigarette tax. Maryland’s Montgomery Council passed a 30 percent tax on the wholesale price of e-cigarettes in May, 2015. (RELATED: Local Lawmakers Left Red Faced After Failure Of E-Cigarette Tax)

The Council expected to collect a cool $1.5 million to $2.5 million per year but the latest figures show the tax actually raised just $175,720 — roughly 80 percent short of what officials predicted.

A Tax Foundation report March 22 mapped the entire country showing which states have been most eager to hit vapers with excise taxes.

North Carolina, Minnesota, Kansas, Louisiana, the District of Columbia and three local jurisdictions have already imposed e-cig excise taxes. Another 23 states considered raising the cost of vapor products in 2015.

E-cigarettes are a relatively new product, debuting in the U.S. in 2007. As a consequence, there is still huge variation between states in terms of their taxation and regulation; many state legislators are in limbo about how to handle them.

“Policymakers should avoid extending punitive rates from traditional cigarettes to vapor products because it limits the consumer’s ability to use vapor products to quit cigarettes,” said Tax Foundation Economist and Director of State Projects Scott Drenkard. “Our first reaction should not be to impose cigarette taxes on what is fundamentally a different product.”

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