It will soon cost more to smoke e-cigarettes in Kentucky. New tax starts Aug. 1.
Tony Florence is not happy Kentucky is levying a new tax on e-cigarettes starting Saturday.
Florence operates five stores in Kentucky — four in Lexington and one in Louisville — that sell vaping products — electronic devices used to inhale a nicotine-laced aerosol or vapor that is highly addictive.
“In my mind, vaping is supposed to help people not smoke. It’s an alternative to smoking,” said Florence. “Some people have problems with vaping but I think it is safer than cigarettes.
Health advocates see things differently.
“This new tax is clearly a win for health in Kentucky, especially for our adolescents and teens, because it will result in a significant price increase that will deter many of our youth from using dangerous e-cigarette products,” said Ben Chandler, president and chief executive officer of Foundation for a Healthy Kentucky.
E-cigarettes are the only tobacco product sold in Kentucky that is not subject to an excise tax. That changes Saturday.
Kentucky lawmakers this year approved a tax-revenue measure — House Bill 351 —that included an excise tax on e-cigarettes in hopes of decreasing teen use of the products by increasing their prices and raising more money for the financially-strapped state budget.
In addition to the state’s 6 percent sales tax, an excise tax will be imposed on closed and open vaping systems of e-cigarettes. The bill says the new tax will be $1.50 on each closed vapor cartridge or pod and 15 percent of the actual price for which the distributor sells an open vaping system.
Closed vaping systems have the liquid built into a closed cartridge and are not refillable. Examples of these are JUUL e-cigarettes, which package nicotine salts from leaf tobacco into one-time use cartridges.
Open vaping systems are refillable and include intricate and interchangeable parts.
The new excise tax on vaping products is expected to generate about $7.9 million for the state this fiscal year and slightly more in coming years since the tax did not start on July 1, the beginning of this fiscal year.
Florence claims if electronic cigarettes were available years ago, his father may still be alive and not a 2002 victim of lung cancer.
“I’m not saying there should not be long-term studies on e-cigarettes, but I know vaping is better than smoking,” he said.
He said many of his customers would go back to smoking tobacco products if vaping were not readily available.
Vaping is generally cheaper than smoking cigarettes, which has attracted teens who probably would have never started smoking, health officials contend.
“The average consumer will use one 60 ml bottle of e-liquid a week. The cost is $15 to $20 for a bottle,” Florence said. “A one pack-a-day cigarette smoker with 20 cigarettes in a pack will spend $35 to $42 a week for Marlboros.”
Twenty-one states and the District of Columbia levy taxes on vaping products, while several localities levy the tax independently from their states.
Florence takes issue with the new Kentucky tax provision that places the 15 percent tax on hardware for open vaping systems, such as the tank, battery and coil.
“We believe that is a clerical error,” he said. “No state around Kentucky has a hardware tax.”
Jason Underwood, a lobbyist for the vaping industry in Kentucky, said he will ask the state Department of Revenue to clarify the issue. He said it was made clear to the vaping industry at the end of this year’s legislative session that it was not lawmakers’ intent to tax vaping hardware.
“By accidentally putting this hardware tax into the bill they are going to drastically impact the locally owned vapor stores in Kentucky,” said Florence.
Rep. Jerry Miller, R-Louisville, worked on the legislation this year. He said it was not his intent to tax the hardware of vaping products but it got into the final bill.
“If it needs to be looked at, we can look at in the 2021 legislative session,” said Miller.
Chandler said the relatively low cost of e-cigarettes has been a factor — along with the kid-friendly flavors — in luring up to 80,000 Kentucky kids to try “these highly addictive products.”
“We applaud the legislature for adopting a pod tax that will substantially increase the price of the products that are most popular among youth right now, including the JUUL and knock-off reusable devices and the Puff Bar and Posh disposable e-cigarettes,” he said. “In the midst of the coronavirus pandemic, inhaling toxins that are shown to damage the lungs puts these kids and every other smoker and vaper in the commonwealth at greater risk for serious complications from COVID-19.”
He said his organization urges people using e-cigarettes to take advantage of free programs offered in Kentucky to help tobacco users quit successfully.
The Kentucky Department for Public Health has agreed on a year-long, $18,000 contract with This is Quitting, a nationwide cessation text service aimed at helping young people, ages 13 to 24, to stop using e-cigarettes.
