Ohio Gov. DeWine Should Veto Vaping Tax Hike

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Posted by Laurel Duggan on Wednesday, July 3rd, 2019, 4:17 PM PERMALINK

UPDATED

Ohio's budget is finally through the legislature, but it still includes some costly tax policies that can be improved if Governor Mike DeWine uses his line-item veto power to take them out of the $142 billion plan. Make no mistake, the budget includes significant income tax relief, but there is a last chance to make it better for taxpayers.

One of those taxes is the ten cents per milliliter tax on the liquid contents of electronic cigarettes and vapor products. This tax hike would be bad for business, harmful to public health, and likely fail to bring in its anticipated tax revenue.

The state Senate originally proposed a 17% tax on vapor products, a rate equal to Ohio’s other tobacco products tax. Somehow, throughout the negotiation process, the proposal switched to a one cent per 0.1 mL of vape fluid, which can amount to much more than a 17% tax.

Ten cents per milliliter seems manageable at first glance, but some quick math reveals how damaging the tax would be for segments of the industry. A 120mL bottle of e-liquid, which retails at around $25, would be taxed at $12 under the most recent version of the budget. That’s a 48% tax, nearly triple the tax rate of most tobacco products and well over the $1.60 per pack cigarette tax rate (an effective rate of about 25%).

Brick and mortar vape shops that are already struggling may be unable to afford to stay in business.

The tax is by volume, so more expensive vaping products would taxed at a rate comparable to cigarettes (a pricier e-liquid sells at $26 for 60 ounces; the $6 tax would be 23%). Since vaping is far less harmful to adults than the use of cigarettes, it is in the best interest of public health to keep taxes lower for e-cigarettes than traditional cigarettes.

This tax hike ignores the growing scientific consensus that e-cigarettes are around 95% less harmful than traditional cigarettes. If the price of vaping rises compared to smoking, it will be harmful to public health because many low-income users will be priced out of less harmful alternatives.

Adults that currently vape may be forced to switch back to cigarettes if vaping gets too expensive. Traditional smokers face a similar problem: the last thing smokers need is another obstacle to using tobacco-free and reduced risk alternatives to cigarettes. Ohio’s tax policy should not discourage smokers from switching to e-cigarettes, nor should it manipulate its markets to make cigarettes and other tobacco products cheaper than vaping products.

Some voters support vape taxes because they are skeptical of the new and unknown. Their technophobia fails to take into account what we do know: that vaping is safer for adults than smoking, and that taxing vape products out of the market will push users to more harmful products.

The vapor product tax, along with other sin taxes, is prone to failure. Its two goals are to bring in revenue to the government and to control constituents’ behavior. If it works, adults will stop or reduce levels of vaping. As people stop buying taxable vapor products and their contents, or go out of state, the source of tax revenue is lost.

Governor DeWine can undo this mistake with a veto as he hurries to sign the budget.

Photo Credit: Wikipedia

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