The Pennsylvania State Assembly may have just sealed the fate of its entire vaping industry by officially passing a 40% e-cig tax that threatens financial bankruptcy for over 300 small business owners statewide. The tax was part of a $1.3 billion bailout package meant to rectify the state’s growing budget deficit, and it is the largest tax increase of its kind in modern history. Gov. Tom Wolf (D) originally requested a whopping $2.7 billion package, but he was rebuked by state senators and representatives.
The date at which the new 40% e-cig tax will take effect is still rather unclear, but one thing is certain. Once it takes effect, all Pennsylvania retailers and manufacturers will be forced to pay an immediate “floor tax” at a rate of 40% of the wholesale value of their entire inventory. This is an enormous expense that even the most successful retailers would find incredibly crippling.
Price hikes vs. bankruptcy
Most political insiders expect the Pennsylvania 40% e-cig tax to take effect within the next few weeks to perhaps 90-days, giving very little time for vendors to develop a financial recovery plan. If business owners are forced to pay a huge floor tax almost immediately, then they will likely have to transfer this additional cost to their customers through implementing price hikes on their current product lines.
In an age where consumers can find everything from vape mods, wicks, and e-juice readily available online for a cheap cost, why would anyone want to pay nearly double the price for products sold in a local vape shop? This is the primary fear that is rocking the Pennsylvania vaping industry at the moment.
House passes Pennsylvania 40% e-cig tax by huge margin
Both Democrats and Republicans joined forces to pass the controversial e-cigarettes tax. The bi-partisan bill passed the House with a margin of 116-75. The Senate approved it by 28-22. Keeping in mind that the 40% e-cig tax was only a very small portion of the overall $1.3 billion bailout package, many national vaping advocacy groups caution the vaping communities in other states to watch out for this type of hidden, anti-vaping taxation.
Pennsylvania becomes the sixth and largest state in the country to implement an e-cig tax. The others include West Virginia, North Carolina, Minnesota, Louisiana, and Kansas. Currently, several other states also have similar bills already making the rounds through state congressional chambers, too. If this pace keeps up, the typical vaping consumer may begin seeing tremendous price increases across the board, as even online vape shops may begin to raise prices simply out of fear of the unknown.