Indiana lawmakers are close to approving a new state tax on vaping products even as a proposed increase in the state’s cigarette tax has been derailed.
The plan backed by state Senate Republicans for the new tax on electronic cigarette liquids and devices, however, is being lambasted by health advocates as inadequate to discourage vaping.
Senate Appropriations Committee Chairman Ryan Mishler, a Republican from Bremen, said Thursday the vaping tax was meant “to tell these kids it’s dangerous and to have a parity with tobacco.”
But the president of the state’s largest business organization says the Senate’s proposed tax amounts to “a measly one-tenth” of the state’s cigarette tax and is “arguably worse than no increase at all.”
“Such an insignificant tax will do nothing to detour our youth from vaping and becoming severely addicted to nicotine,” Indiana Chamber of Commerce President Kevin Brinegar said. “It’s unacceptable and allows the Juuls of the world to win because they can say we are now taxed in Indiana.”
The Senate’s vaping tax proposal would impose a mix of wholesaler and retail taxes, while a House-endorsed plan would establish a flat 10% tax at retailers.
Vaping tax advocates want a 15% retail tax, which would amount to about $1.50 for a two-pack of vaping pods.
Danielle Patterson, a lobbyist for the American Heart Association, said the House plan was a better method for the tax, while the Senate proposal “is too low, too confusing, it is not in parity with tobacco taxes, and will not be effective in reducing e-cigarette use, especially among youth.”
Mishler didn’t immediately reply Friday to a request to his office for comment about opposition to the vaping tax proposal.
Senate leaders had decided last week to reject a 50 cents-per-pack increase in the state’s cigarette tax that had been included in the House budget plan. For several years, the Senate has blocked any increase of the state’s current 99.5 cents-per-pack rate that was last raised in 2007.
A coalition of health and business groups has pushed for a $2-per-pack increase, calling it a needed step toward driving down Indiana’s 21.1% smoking rate for adults, which was the fourth highest in the country for 2018, according to the federal Centers for Disease Control and Prevention.
The House plan was projected to raise about $150 million a year from the cigarette tax increase and $5 million a year from the new vaping tax.
Mishler said Thursday he didn’t believe that even a $2-per-pack increase would lead many people to quit smoking. He said supported holding off on a cigarette tax increase for use if the federal government forces states in the future to cover more of costs for the Medicaid, the federal-state health program for low-income people.
“Someday we’re going to need to do a significant increase and pay for our health care costs,” Mishler said. “So we’ve decided that is probably more responsible to hold on to that until we have that need.”