The state House passed a bill on Wednesday to increase taxes on vaping products and other non-cigarette tobacco products, a measure estimated to raise $50 million of new tax revenue over the next two fiscal years. It is aimed at curbing vaping and smokeless tobacco use in a state with one of the highest cancer rates in the country while also raising much-needed revenue for a cash-strapped budget.
Sponsored by Rep. Jerry Miller, R-Louisville, House Bill 32 would add vaping products to the list of smokable tobacco products such as cigars that are subject to a wholesale tax, with that rate increasing from 15% to 25%.
The legislation also doubles the per-unit tax on non-smokable and chewable tobacco products but does not affect the tax rate on packs of cigarettes.
The measure passed 75-17 Wednesday. It now goes to the Senate.
“House passage of the e-cigarette tax bill marks a significant step forward in protecting youth from the dangers of e-cigarettes or “vapes.” These products have been aggressively marketed to our children and likely have addicted more than 18,000 teens in Kentucky, conservatively speaking. Raising the price through an excise tax is among the most effective measures to help keep more kids from trying these products and becoming subject to a lifelong addiction to nicotine. The 25 percent tax is very close to Kentucky’s current cigarette tax. The 50-cent increase in that tax, for which we advocated in 2018, reduced cigarette sales in Kentucky by 36 million packs in its first 12 months. Special thanks to Rep. Jerry Miller for his leadership on this bill. We strongly encourage the Kentucky Senate to adopt this e-cigarette excise tax as well in the hope that we can see a similarly dramatic drop in youth vaping in Kentucky in the coming months and years.”Ben Chandler, president and CEO of the Foundation for a Healthy Kentucky.
When the legislation passed out of committee two weeks ago, an organization representing 400 vape shop owners told legislators it would hurt their small businesses and discourage adults from choosing vaping as a way to quit smoking cigarettes.
Miller and organizations like the Foundation for a Healthy Kentucky say the price increase on e-cigarettes will help curb the use of highly-addictive vaping products by youth in the state.
Speaking about the dangers of e-cigarette use by children on the House floor Wednesday, Miller said: “the products that children are abusing are truly creating a crisis.”
The new tax revenue raised by the legislation is also a key component of Gov. Andy Beshear’s proposed two-year state budget.
The governor’s budget plan assumes the passage of legislation raising taxes on vaping and non-cigarette tobacco products will bring in $54.8 million of new revenue over two years, as well as a 10-cent increase on cigarette taxes that would create almost $40 million of new revenue.
In a press release, Ben Chandler, the CEO of the Foundation for a Healthy Kentucky, called the passage of HB 32 “a significant step forward in protecting youth from the dangers of e-cigarettes or ‘vapes.'”
Rep. Attica Scott, D-Louisville, voted against the bill, saying it didn’t make sense to exclude cigarettes from an additional tax increase on tobacco products.
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