Politics & Government

Whoops! Kentucky lawmakers didn’t pass an electronic cigarette tax as they claimed

Johnathon Gray, left, chucks vapor as Joshua Fields vapes at 723 Vapor on Richmond Rd. in Lexington, Ky., Saturday, August 28, 2014.
Johnathon Gray, left, chucks vapor as Joshua Fields vapes at 723 Vapor on Richmond Rd. in Lexington, Ky., Saturday, August 28, 2014.

The Kentucky legislature did not include a 15 percent tax on electronic cigarettes in its tax overhaul bill, despite claiming last week that it did.

At the last minute on April 2, lawmakers dropped the proposed tax on vaping products from House Bill 366. But they did not spread the word to everyone at the Capitol as the bill was introduced and rushed to final passage in a matter of hours.

A short summary of the bill sent to the news media mistakenly included electronic cigarettes among the items that would be taxed, Senate Republican spokesman John Cox said Wednesday. And one page of the 350-page free conference committee report that hashed out a compromise on the bill still carried a reference to electronic cigarettes. It just wasn’t the page that would have levied the tax.

Among other things, the bill would apply Kentucky’s 6 percent sales tax to 17 services, including auto repair and small animal veterinarian care, and it would increase the state’s cigarette tax from 60 cents a pack to $1.10.

Kentucky expected to raise $245 million more over the next two years from the new taxes on regular and electronic cigarettes, according to a now-outdated legislative staff analysis. There was no breakdown for how much revenue would be collected just from electronic cigarettes.

At least eight states and the District of Columbia levy a tax on electronic cigarettes, according to the Public Health Law Center at the Mitchell Hamline School of Law in Saint Paul, Minn.

Earlier discussions of tax changes in Kentucky included a levy on electronic cigarettes, but the Kentucky Smoke Free Association lobbied against it, said Jason Underwood, a Frankfort lobbyist for the group that includes vaping stores.

“I got the one-page summary they handed out Monday and saw the tax was in there. We were a little concerned,” Underwood said. “But those who had the final word clearly made the right decision.”

Underwood said vaping saves money for Kentucky’s Medicaid budget because its practitioners tend to be people trying to quit smoking. Roughly one-third of the state population gets health coverage through the Medicaid program, funded by the federal and state governments.

“I can tell you that many of the conversations we had (with lawmakers) this year centered on the fact that vaping products should not be counted with tobacco products, because there is no tobacco in our products,” Underwood said.

Gov. Matt Bevin vetoed both the tax bill and the two-year state budget bill this week, something the legislature will have to deal with when it returns to Frankfort on Friday for the 59th day of its 60-day session. The House and Senate can override his vetoes with a constitutional majority — at least 51 members of the House and 20 members of the Senate.

John Cheves: 859-231-3266, @BGPolitics