On October 1, all Pennsylvania vape shops will be required to pay a 40 percent e-cig tax on all retroactive inventory, threatening financial bankruptcy for more than 300 vape shops statewide. However, there may be a light at the end of the tunnel as the House Finance Committee recently voted 19-4 to repeal the tax and potentially save as many as 1,500 jobs.
Rep. Jeff Wheeland offered a new piece of legislation called HB 2342 which would replace the 40 percent inventory tax with a 5-cents per milliliter tax on all e-liquids. While this would still place a financial burden on retailers, Wheeland believes the new legislation will raise enough money to overcome the state’s budget deficit without driving vape shops out of business.
40 percent tax ‘unfairly targeted’ vaping industry
The 40 percent tax increase was approved this summer and signed into law by Governor Wolf. It was part of a larger $650 million tax hike package, but the e-cig portion only accounts for a small percentage, or $13 million in revenue for the state. That is just 2 percent of the desired goal, and legislators fear that driving vape shops out of business will only result in a loss of traditional business taxes that far outweigh the perceived additional $13 million in taxes.
“It’s unconscionable that Harrisburg was willing to drive Pennsylvanians out of their businesses and out of their jobs for $13 million in revenue while at the same time handing out millions in state subsidies to multi-billion-dollar corporations like Amazon and Netflix…Today, the House Committee took a critical first step toward righting this injustice. We urge the full House to act swiftly to pass this legislation and send it to the Senate and, ultimately, to Governor Wolf for his signature before even more vape shops are forced to shutter their doors.”
-Bob Dick, senior policy analyst with the Commonwealth Foundation
While the 40 percent inventory tax is still officially in place, retailers have a full 90-days comply. If Wheeland’s bill can be approved by both houses of the Pennsylvania Congress before this deadline, then perhaps some vape shops can be saved. According to Bob Dick, already more than 50 Pennsylvania vape shops have closed their doors permanently because of a 40 percent e-cig tax that “unfairly targeted” the vaping industry.