Last month, Democratic Gov. Dannel Malloy released a compromise budget proposal for FY18 and FY19, which includes a proposed 75% wholesale tax on electronic cigarettes. He is urging state lawmakers to act urgently and pass this budget, which also hikes the tax on smokeless tobacco from $1 per ounce to $3 per ounce, by the end of this month.
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In the meantime, vaping advocates are bracing themselves, as this extremely harsh tax, that would be effective as of next January, could disseminate the vaping industry in the state. Additionally they fear that the price hikes and unavailability of the products will prompt smokers who had switched to the safer alternatives to revert back to smoking.
“This is basic economics. Price differences between substitutable goods shapes demand for those goods,” said David Sweanor from the Center for Health Law, Policy and Ethics at the University of Ottawa. “If we are talking about the impact of price differences between apples and oranges we are likely just explaining the concept to students. But when we are talking about a tax that reduces the economic incentive to switch from lethal cigarettes to massively less hazardous vaping products, we are talking about the loss of lives.”
Almost double the disastrous Pennsylvania tax
The Connecticut vape tax proposal almost doubles the 40% wholesale tax in Pennsylvania, that has caused tremendous damage to the industry since it has been implemented in almost a year, forcing many businesses to shut down, and pushing consumers to buy their products out of state.
“As we saw in Pennsylvania, where a 40 percent wholesale tax led to the shuttering of nearly 150 stores, consumers will turn to out-of-state and internet sales when excise taxes are set too high,” said Gregory Conley, president of the American Vaping Association. “Nearly doubling Pennsylvania’s ridiculous tax is a recipe for disaster. Even worse, this tax also threatens to reverse the progress that has already been made in reducing Connecticut’s smoking rate. It is absolutely critical that the Connecticut Legislature rejects Gov. Malloy’s new tax on vapor products.”