For the third year in a row, lawmakers are considering legislation that would impose a tax on e-cigarettes, such as vaping devices, intended to make it more expensive and harder on young people to buy the products.
“This bill is about protecting our children from becoming addicted to nicotine,” the bill’s sponsor, Kodiak Sen. Gary Stevens, said in presenting his legislation to the Senate Finance Committee on Feb. 2.
In addition to imposing a tax on vaping devices and liquids and other e-cigarette products, the bill, if approved by legislators and signed into law by the governor, would prohibit the sale of tobacco and e-cigarette products over the internet.
The measure also would ban the sale of flavored vaping and e-cigarette products, which generally heat up a nicotine liquid to deliver an aerosol for users.
The measure would impose a 75% state tax on the wholesale value — not the retail price — of e-cigarette products. The tax would be paid by the wholesaler or distributor when the goods are brought into the state, or by the manufacturer if the products are made in Alaska.
The tax rate would be among the highest in the nation, Tim Lamkin, a member of Stevens’ staff, told the Finance Committee. “The thrust in this bill is to get it out of children’s hands.”
The Department of Revenue estimates the tax would raise about $2.5 million a year.
The Matanuska-Susitna Borough has taxed electronic smoking products at 55% of the wholesale price since 2015. Juneau and Petersburg also tax e-cigarette products.
The 75% tax on the wholesale value is the same rate the state has charged for years on cigars, loose cigarette and pipe tobacco. The state tax on regular cigarettes is $2 per pack of 20.
“You’ll be hearing from some very well paid lobbyists to lower the taxation,” Stevens said of his legislation.
David Hancox, representing R.J. Reynolds, which makes cigarettes and vaping products, testified against the bill, telling the Senate Finance Committee the measure would “limit the benefits” for adults who want to use the “healthier alternative” of e-cigarettes over tobacco.
Committee member Sen. David Wilson, of Wasilla, offered a similar comment. “Why do we want to decrease the use of a safer option” to tobacco products, calling it “a heavy tax.”
“The tax, flavor ban and insurance provisions in this bill will do great damage to public health and small businesses in Alaska,” the American Vaping Association said in a Feb. 2 letter submitted in opposition to Stevens’ bill.
“Vaping products are far less hazardous than smoking,” and help adult smokers quit tobacco, the trade group wrote.
Several members of the public testified Feb. 2 on Senate Bill 45, including Hunter Johnson, of Soldotna, who opposed the legislation, explaining it “will not stop children from doing what they want to do.”
Boosting the price of e-cigarette products is the most effective way to reduce their use, Christy Knight, tobacco control manager for the Department of Health and Social Services, told the committee.
The bill also would amend state statute to bring it in conformity with a 2019 federal law that sets 21 as the minimum age to buy tobacco, nicotine or electronic smoking products. The minimum age is 19 in Alaska law. And it would prohibit store clerks under the age of 21 from selling the products.
Anchorage Sen. Bill Wielechowski said he was concerned the provision could limit job opportunities for younger workers at gas stations or convenience stores that sell e-cigarette products.
Similar legislation died in 2020 as legislators rushed to shut down the session at the start of the COVID-19 pandemic. Stevens’ bill moved through its first committee last year, with the Finance Committee its last stop before it can go to the full Senate for a vote.
The Finance Committee heard the bill and held it for further action.
A House bill, sponsored by Juneau Rep. Sara Hannan, is waiting for a hearing before the House Finance Committee, where it moved last year.
Supporters of the legislation include the Mat-Su Health Foundation, which said in a letter last year: “Adolescents perceive e-cigarettes as safer than regular cigarettes, but it is a myth that these products are safe or that they are a (tobacco) cessation tool.”
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