The Alaska Senate by a wide margin last week approved legislation to tax e-cigarette products just as the state taxes cigarettes and tobacco products.
The legislation, which is scheduled for hearings this week in two House committees, also would raise the legal age to buy and sell tobacco products, including vaping devices and liquids, from 19 to 21 years old to match federal law.
The House and Senate are working toward a May 18 adjournment deadline in the constitution, pushing both chambers to move quicker on legislation.
“The goal here is to get it (vaping products) out of the hands of our children,” the bill’s sponsor, Kodiak Sen. Gary Stevens, testified in the Senate Finance Committee on April 19, a day before the bill passed the full Senate on a 15-4 vote.
Senate Bill 45 would impose a state tax of 75% on the wholesale price of vaping liquids and 45% of the wholesale price on sticks and other devices. The state taxes cigars and loose tobacco at 75% of the wholesale price, and cigarettes at $2 per pack.
Every time the state has raised the tax on cigarettes, it has reduced use among young people, Stevens said.
As cigarette taxes increase nationwide and the percentage of Americans who smoke declines, “the tobacco industry has responded with fashionable items” to attract people to vaping products, the senator said during floor debate on the bill April 20. “It is working.”
Stevens is trying to reverse the gain of vaping products, and has been working on the tax and regulatory legislation since 2015.
The state doesn’t track the wholesale price of e-cigarettes or vaping products, but it appears the new tax, which would take effect July 1, 2023, could add anywhere from a couple of dollars to several dollars to the retail price of the products.
The municipality of Anchorage imposes a 55% tax on the wholesale price of devices and liquids, as does the Matanuska-Susitna Borough. Juneau and Petersburg also tax the products.
The four votes against the bill came from Republican senators representing Anchorage, Palmer and Wasilla, including Sen. Mike Shower, of Wasilla, who said during floor debate: “You’re old enough to carry a gun, you’re old enough to die for your country, but you’re not old enough to drink? To smoke a cigarette if you want? To vape?”
Shower added, “That’s a hard choice for me to look at somebody in the eye and say you can’t be destructive to yourself. … I don’t think we’re being honest about what it means to be an adult.”
Fairbanks Sen. Scott Kawasaki objected to the tax on vape sticks and other devices that do not include nicotine liquid. He said taxing those devices would be similar to taxing shot glasses or tobacco pipes, which the state does not tax.
Kawasaki voted for the bill on final passage.
The tax would not apply to online purchases of vaping devices and liquids, only in-state retail sales.
The Department of Revenue estimates the tax would raise about $2.2 million a year.
In 2019, then-President Donald Trump signed a bill into law that raised the federal age to consume tobacco products to 21. Alaska is one of 12 states that have not made the same shift in state law.
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