A federal bill that has been proposed by Senator Dick Durbin will greatly increase the cost of vape products, snus, cigars, cigarettes, pipe tobacco and more. This new proposed tax disproportionately affects vape products more than their cigarette counterparts. A study conducted by the University of San Diego St has found that an increase in tax rates on vape products will simply decrease vaping rates and increase combustible cigarette smoking rates due to an economic “substitution effect”.
Federal Vape Tax Effects
The reason that this could hurt small business owners with tobacco licenses is that the sale of vape products is significantly more profitable than the sale of traditional cigarettes. If consumers start to choose traditional cigarettes over vape products at the counter, many smoke shop and vape shop owners could be at risk of losing their business profits. A study conducted on the effects on the state of Virginia by former tobacco company economist, John Dunham, found that 372 jobs could be lost and small businesses could potentially lose 20.7 million in sales just in the state of Virginia.
The cost of wholesale disposable vapes will skyrocket due to the new proposed bill. Manufacturers will be forced to charge significantly more to shop owners. For example, a 50mg disposable vape that contains 6.5mL of vape juice will be have a federal tax of $9.10 if this bill is passed! Disposable vapes in effect will double in price for consumers.
Not only will this new tax proposal possibly punish small business owners, it will punish Americans living below the poverty line. According to the CDC, smoking rates are disproportionately higher among Americans with a lower socio-economic status. This means that Americans that have a lower income will start paying more for the tobacco products that they regularly buy.
This proposed bill clearly contradicts President Biden’s plan to not raise taxes on Americans making less than $400,000 per year.
Since this bill is currently proposed, you should reach out to the representative in your district in order to let your voice be heard.