Lawmakers on the final day of the legislative session May 18 passed a bill to impose a tax on electronic smoking products, such as e-cigarettes, vaping sticks and refills.
The tax, at 35% of the wholesale price, was in part a compromise between the original version of the bill, at 75%, and opponents who argued against taxing vaping products that could be a healthier alternative for smokers than traditional cigarettes, which are heavily taxed by the state and many municipalities.
The new tax will take effect Jan. 1, 2023, unless Gov. Mike Dunleavy vetoes the measure. The governor did not take a position on the bill during the Legislature’s deliberations.
The bill’s sponsor, Kodiak Sen. Gary Stevens, has been working for several years to amend state law to tax vaping devices and liquids similar to cigarettes and other tobacco products.
In committee testimony on the bill, Stevens explained his intent and hope is that the added tax would deter young people from using vape products, which heat up a nicotine liquid to deliver an aerosol that users inhale.
“The goal here is to get it (vaping products) out of the hands of our children,” Stevens testified in the Senate Finance Committee on April 19.
The final version of the bill passed the House 31-9 and the Senate 18-2 on May 18.
It also raises the minimum age for anyone selling tobacco products to 21, while 19 remains the minimum age to possess a tobacco product. The original version of Stevens’ bill would have raised the minimum age for possession to 21 to match federal law, but that provision was deleted in the House.
The maximum fine for underage possession would be set at $150.
Also on the final day of the legislative session, the Senate failed to act on a House bill that would have suspended the state’s motor fuel, marine fuel and aviation gas taxes for a year, until June 30, 2023.
Suspending the tax, at 8 cents a gallon on gasoline, could have saved an average Alaska driver around $30 to $50 for the year, depending on how much fuel they buy.
The measure passed the House 36-2 on May 4, and made it through its first stop in the Senate, the Transportation Committee, on May 11, but died without a hearing in the Senate Finance Committee in the final week.
Removing the tax for a year would have cost the state about $35 million in lost revenues.
Separate from the motor fuel tax, the legislation would have increased the state tax on refined fuel products by about half-a-penny per gallon to boost support for Alaska’s spill prevention and response program, which is short of funding.
The account is used to clean up spills at service stations, dry cleaners and other sites around Alaska. The half-cent increase would have raised an estimated $3.6 million a year for the Spill Prevention and Response Division at the Department of Environmental Conservation.
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