Hawaii’s House Bill 145 was just unanimously approved by the state’s Senate Committee on Commerce and Consumer Protection. The bill expands the definition of “tobacco product” in the state to include anything with nicotine in it — and then levies an 80% tax on all newly included products.
Mostly the bill aims to tax electronic cigarettes and vapor products because that’s where the new money is, but it also calls on chewing tobacco, small cigars, and snuff to be taxed the same way. One wonders if an exception is written into the bill for other nicotine-containing products — nicotine gums, lozenges, patched would otherwise qualify for the tax. And while they might be excused as approved cessation products, potatoes, cauliflower, green peppers and eggplants also contain nicotine. None of them are approved cessation products.
And there remains the possibility that no nicotine vaping products can circumvent this issue.
So maybe this bill isn’t fully thought out. You can read full coverage of the bill right here.
Already, local vapor products company Volcano is getting involved in the debate as a tax such as this would ruin their ability to compete with companies from outside the state that can simply ship to customers there. CEO Cory Smith says that he’ll have to move out of state of the bill passes, despite a third of his revenues coming from local customers. It’s also likely that many of the state’s 60 or so vape shops will have to close down as well.
This is no mere threat. Places that have instituted high taxes on electronic cigarettes regularly lose businesses and revenue to other states — and even other countries. The mere breath of talk of a tax in Italy resulted in some 2000 vape shops shuttering in the span of a year.
As with most bills like this, the financial upside for the state is the primary focus of the tax. According to leadership in the state, The University of Hawaii’s Cancer Research Center has lost significant tobacco tax revenues from decline tobacco sales. So this tax is designed to make up for those losses.
According to state Sen. Rosalyn Baker, “We have raised the cigarette tax several times, and people are moving from cigarettes, which now have a hefty price tag, to less expensive products that can kill them just as easily… We’re trying to provide a disincentive for the other tobacco products.” Clearly, she knows nothing about vaping.