E-cigarettes

Pennsylvania's New Tax on Vape Shops is Forcing Them Out of Business

Both parties are to blame for a bill that's also making it more expensive for smokers to switch to safer alternatives.

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Sergei Fadeichev/TASS/Newscom

It's Friday afternoon and Chris Hughes is sitting inside his now-empty store in Williamsport, Pennsylvania.

For the past three years, Hughes owned and ran Fat Cat Vaping, one of hundreds of small shops across Pennsylvania catering to the nascent community of electronic cigarette users. Hughes is a "vaper" himself, having switched from traditional cigarettes to the healthier electronic version a few years ago.

After state lawmakers and Gov. Tom Wolf signed off on a budget bill that included a massive new tax on electronic cigarettes, Hughes knew Fat Cat Vaping's days were numbered.

"I knew immediately that I would have to close," he says.

He's not the only one. The estimated 350 vape shops scatter across Pennsylvania are getting hit hard by the new 40 percent wholesale tax on all vaping equipment and supplies. The real kicker is that the same 40 percent tax applies not only to purchases made after October 1—the day the tax took effect—but also covers all inventory on store shelves on that date. That means a store with $100,000 worth of inventory—about what a small vape shop would carry—owes the state $40,000 as of Saturday.

"It's ludicrous to think what was a viable business yesterday — by the stroke of a pen — is no longer a viable business today," Dave Norris, owner of the Blue Door vape shop in Harrisburg, told PennLive in September as he prepared to close down all three of his locations because of the tax.

The tax was passed in July as part of the 2016-17 state budget (taxes on packs of traditional cigarettes increased by $1 as well). It had support from both sides of the Republican-controlled legislature and was signed by Democratic Gov. Tom Wolf. The tax will raise an estimated $13 million.

Some aren't so sure about that.

"I am 100 percent confident that 40 percent of nothing is nothing," says Jeff Wheeland, R-Lycoming. What he means is that the state shouldn't be banking on revenue from the vaping tax if the tax decimates the businesses expected to pay it.

Wheeland and state Sen. Camera Bartolotta, R-Washington, are rallying support to repeal the months-old tax. They are proposing a volume-based tax of five cents per milliliter on vaping fluid to replace the 40 percent wholesale tax. Wheeland says the trade-off would be almost revenue neutral, but would be easier for vaping businesses to handle and would be more in line with how other states tax e-cigarettes.

Consumer Advocates for Smoke Free Alternatives, a national e-cigarette consumer group, favors the 5 percent sales tax. The 40 percent wholesale tax is "completely unworkable," the organization says.

The clock is now ticking. The wholesale tax took effect on October 1, but businesses have 90 days to remit tax revenue to the state treasury. That gives lawmakers until the first day of 2017 to repeal the tax—but with the election looming, the state legislature is scheduled to be in session for fewer than a dozen days between now and the end of the year.

Opponents of the vaping tax say it will not only wreck Pennsylvania's growing vape shops, but will also make it harder for smokers who want to use e-cigarettes to quit the habit.

"A pack of cigarettes is going to be more affordable," Dori Odosso said in an interview last week. "That's something that I don't ever want to hear someone say to me—that they are smoking cigarettes instead of vaping because they can't afford to switch."

Odosso owns the Sweet Home Vaper Company in Kittanning, Pennsylvania. She started the business in 2014 after switching from smoking to vaping and finding out that other smokers in her small hometown wanted to do the same.

Despite fears from the federal government and anti-smoking groups, medical research shows vaping to be a safer alternative to smoking traditional cigarettes. Vapers get the same hit of nicotine and get to continue their habitual activity without inhaling the nasty tar, smoke and chemicals that are part of the reason why cigarettes are so unhealthy.

A study published in August by the journal Nicotine & Tobacco Research seems to confirm the life-saving potential of e-cigarettes. As Reason reported at the time, researchers found that substituting e-cigarettes allowed nicotine intake to stay the same, while exposure to tobacco-related toxins and carcinogens fell.

Since Pennsylvania's new e-cigarette tax was passed as a stop-gap way to pay for a $31 billion state budget in an election year when broader taxes would not be considered for political reasons, it's probably right to view it as an act of political expediancy rather than an intentional whack at the vaping industry.

Intentions don't change the outcome, though. The huge tax hike sends a questionable message to Pennsylvanians who smoke, says Hughes.

"The message that our government is sending," he said Friday, just hours before the tax became official, "is that it's so wrong to use electronic cigarettes that they have to hit them with a 40 percent sin tax."

Update: An earlier version of this story inaccurately described the vaping tax proposed by state Rep. Jeff Wheeland. It is a per-milliliter tax, not a percentage tax.

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  1. As if Eric Garner wasn’t proof enough that taxes kill.

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    2. I’m making over $16k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. Then this work is for you… Go to website and click to Tech tab for more work details… http://tinyurl.com/glve3gm

    3. It is fascism. The State and Corporations are one: http://classicalvalues.com/201…..o-america/

      It is not about taxes from the vape shops. It is about protecting the taxes on tobacco.

    4. It’s Pennsylvania, the state where merchants can’t sell liquor, beer, or food in the same store. What do you expect?

  2. It had support from both sides of the Republican-controlled legislature and was signed by Democratic Gov. Tom Wolf.

    The Commonwealth boasts some of the dumbest fucking lawmakers this side of wherever you are. How our full-time state legislature fills its days are beyond me, other than simply I guess cooking up new ways to fuck things up. And Wolf basically campaigned on taking everyone’s money, so I don’t know what else anyone expected when they voted him in.

    1. Well, Dick (has no balls) Thornburgh was once the governor. It only got worse after that eunuch.

  3. This is bullshit. All 50 U.S. States as well as D.C. and other territories, are indivisibly joined in perpetual union as part of one VAPE NATION, under Klein, where we rip the fattest vapes and chase the fattest clouds.

    Papa bless.

    VN.

    1. +1 bandana and funky glasses

    2. Damn it HM, I knew I liked you.

  4. Fucking Laffer Curve, how does it work?

  5. That’s right. More black markets for all.

    The parasite class is supposed to just be parasitical for cash; not actually act like they have parasitical brains.

    1. You shouldn’t be coming to my favorite support group, Marla.

  6. I guess Hillary is going after Trump by way of the New York Attorney General.

    “New York attorney general orders Trump Foundation to stop soliciting in state”.

    http://www.reuters.com/article…..SKCN1231V5

    So I guess Hillary has an October Surprise of her own.

    Makes that fatboy in New Jersey’s bridge antics look amateur by comparison.

    1. I know Assange canceled a speech from the Ecuadorean embassy that was supposed to be delivered tomorrow.

      I don’t know if that means he’s rescheduled the data dump of it’s just the speech, but this week’s news cycle is going to be a tug of war.

    2. You know who else has a foundation?

      1. I’m sure the timing is just a coincidence.

        This is the same hyperpartisan AG who’s suing the oil companies for “fraud” because they aren’t climate alarmists, right?

        1. Too bad the squirrelz didn’t hit your comment.

      2. The Clinton “Foundation” has NY permission to pander for donations. The rest of you fucking charities, FU!

      3. The Clinton Crime Family(tm)?

  7. I feel bad for the people who worked their asses off only to see the rug pulled out from under them for no good reason. What a shame.

    1. We have a long way to go to get back to free market in the USA. Sad. Just sad.

  8. “I am 100 percent confident that 40 percent of nothing is nothing,”

    TYPICAL RIGHTWING MARKET EXTREMIST

    1. He doesn’t understand that Pennsylvania wants their vape shops to be reduced to 0%.

      1. Tobacco sales are a huge slice of convenience retail profits, probably also booze shops (*although Penn is state-stores, right? Do state-stores /ABC also retail tobacco?)

        People who blame lobbyists for “big tobacco” for every defensive act by government don’t fully appreciate that any legacy-market will have lots of vested interests involved; Governments will act to defend large, dying industries even without significant prodding from the “Big Corporations”. The coalition of self-interested local businesses are often enough to squeeze out these specialty competitors. At the very least, they can get rid of them, then start selling the products themselves, ensuring they can afford the tax-penalties while a smaller player could not.

        1. See, also, Baptists and bootleggers.

        2. Tobacco sales are a huge slice of convenience retail profits, probably also booze shops (*although Penn is state-stores, right? Do state-stores /ABC also retail tobacco?)

          NOT AT CVS.

  9. “A pack of cigarettes is going to be more affordable,” Dori Odosso said in an interview last week. “That’s something that I don’t ever want to hear someone say to me?that they are smoking cigarettes instead of vaping because they can’t afford to switch.”

    Well then, the law is working as intended.

  10. The real kicker is that the same 40 percent tax applies not only to purchases made after October 1?the day the tax took effect?but also covers all inventory on store shelves on that date.

    *boiling rage ensues*

    1. Even worse is that even if these businesses had the money to sue for ex post facto violations and Pennsylvania has ex post facto built into its state Constitution, they will be out of money soon.

  11. The government doesn’t give a shit about you or your health.

    Always remember this.

    1. When the government kills people attempting suicide, it is clear the government cares 0% about you or your health.

  12. And by making it a wholesale tax, they remove that line item from the sales receipt and make the wholesale tax itself taxable with sales tax at the final sale.

    What a bunch of *insert Ken’s favorite word here*

  13. Capitalism is murder.

    The mainstream media has a full court press on right now about the “amorality” of capitalism, and how “we” need to rein in the deranged libertarian moneygrubbers before it’s too late.

    Example:

    Of course, the difference is that Trump broke no laws. But when a billionaire avoids paying taxes, he breaks a law that ought to be self-policing: the law of basic human decency.
    If the tax return is accurate and tax was avoided, did The Donald never stop to think, “I ought to contribute something towards all the roads, cops, military, schools, etc., that my business empire relies upon?”
    Doing something because you can is no reason to do something. If a crazed libertarian became president and somehow legalized murder, I assume that we wouldn’t all start doing it?, right The human conscience, which religious conservatives insist is the voice of God, would suggest otherwise.
    Trump’s vision of capitalism is amoral. This is not to say that he is a bad person: he has raised plenty of money for charity and his presidential campaign betrays a deep concern for his country. But when it comes to doing business, he seems to think that the capitalist should do whatever it takes to turn a profit.

    oBEYING THE TAX LAWS IS THEFT, PEOPLE.

    1. Timothy Stanley is a historian and columnist for Britain’s Daily Telegraph

      Doing something because you can is no reason to do something. If a crazed libertarian became president and somehow legalized murder, I assume that we wouldn’t all start doing it?, right The human conscience, which religious conservatives insist is the voice of God, would suggest otherwise.

      What the fuck?

      1. The comments.

        My Lord.

        Also.

        Timmy. Punchable?

      2. Even to a depraved prog mind, I can’t see how that makes sense.

        1. You are assuming the prog-types care about logic, sense and reason.

          1. “How do you write women so well?”

      3. God says you should kill your firstborn son. That’s why I emigrated to Taiwan.

        1. Plus American smokes are $1.25 a pack.

    2. NOT GIVING IS TAKING.

    3. And FFS, all Trump did was claim a loss and carry that forward. Are we going to make that illegal now? Why don’t we just claim all corporate profits for the greater good while we’re at it?

      1. Haven’t you gotten the progressive memo that all businessman are bad?

    4. And Tim Stanley is the worst Christian apologist ever

      At the centre of all moral inquiry is the Crucifixion. It definitely did happen, by the way ? the historical sources for it are very strong. And once you accept the premise that a man willingly died for our sins, the rest of life has to be analysed through that prism. Why did he do it? Did he really do it for me? I didn’t ask him to do it. Wouldn’t it have been more useful to free the Jews and smash the Romans? Why, oh why, is the Christian god so weak ? when the ancient gods were heroes who could carry the world on their shoulders?

      1. This guy is really something else.

        1. He also clearly hasn’t read much theology. The ancient gods are a pretty despicable bunch. You know how they say “if you meet the Buddah on the road, kill him”?. If you meet Woton on the road, kill him if you possibly can, burn the body, and bury the ashes with salt.

          The Roman gods are only very slightly better.

  14. Is there any person more despised in America right now than someone who sticks a thing in their mouth and sucks?

    1. No sugar! No big sodas! No cigs! No vaping! No prostitution!

      No talking, against the progressive narrative!

      Democrats- The party of NO!

    2. It depends on what kind of joint you’re talking about.


  15. Is there any person more despised in America right now than someone who sticks a thing in their mouth and sucks?

    The guy who declines to bake the celebratory cake?

  16. e-cigarettes allowed nicotine intake to stay the same

    That’s why there’s a sin tax.

  17. Tony assures me that taxation is voluntary and inherently nonviolent, so I don’t see the big deal.

  18. PA is a statist shithole.

    That is all.

    1. So is every other state in some way or another. So there’s that.

      1. Some are orders of magnitude worse than others.

        1. PA is a hypotenuse.

      2. There are beacons of hope. Little candle beacons.

        Add more fire to the flame and get these beacons raging!
        https://throwflame.com/

  19. “The real kicker is that the same 40 percent tax applies not only to purchases made after October 1?the day the tax took effect?but also covers all inventory on store shelves on that date. That means a store with $100,000 worth of inventory?about what a small vape shop would carry?owes the state $40,000 as of Saturday.”

    How is this even legal? Seriously. This is perhaps the most blatant FYTW I’ve ever seen. You would probably save money by throwing your inventory in the garbage. That’s insane.

    1. And by ‘save money’ I mean ‘that shit is a sunk cost I’m not getting back either way since I’m now out of business’. That is all.

      1. Highly unlikely that any small business has cash equal to 40% of inventory laying around to give away for nothing. This is a small business killer, no doubt.

        Depending on the markup, it might be theoretically possible to make money on pre-existing inventory. If the markup is 50%, say, your revenue on sales would show a 10% margin. Whether that’s enough to keep the doors open, I couldn’t say.

        But, even if you have the cash to pay the tax, I’m guessing this tax is going to make it impossible to to have enough net operating income to cover all the bills.

        1. “Highly Unlikely” is even an understatement, 40% of initial investment is more capital than a bank has to keep around let alone a small business with less than 10 employees.

          Either way, a 40% tax on goods you’ve already purchased seems like exactly the kind of thing I would take to the supreme court as a small business owner. Obviously, if you can’t afford to do that I guess you’re already screwed but it’s the same thing as if I bought a personal jet for $750,000 then a few months later the government decides to charge me an extra 40% of the sticker. I didn’t think ex post facto laws were allowable, but if we’ve arrived here I don’t know what to believe anymore.

          Lastly, I won’t quibble, I imagine that even if you did toss half your $100,000 inventory into the trash the government would still want their $40,000 either way. So this seems like a guaranteed tax problem and probable jail time for a whole lot of people.

          1. [q]I didn’t think ex post facto laws were allowable, but if we’ve arrived here I don’t know what to believe anymore.[/q]

            Truly some interesting times we live in. If the conspiracy theorists are right and there are “Secret Masters” in charge of everything, I’m willing to bet even they don’t know what’s going on. This, of course tends to make them grumpy.

      2. “Someone robbed my store”, collect insurance, and run your business out of your garage seems reasonable.

  20. More reason that Pennsylvania will vote Trump in 2016.

    Taxes are out of control and supposedly Trump will lower taxes/make tax filing easier.

    1. Except he called a woman fat which was like worse than Kristallnacht.

      1. She is fat. Fatty fatty 2 by 4.

        All you have to do is ignore these faux issues or point out that there are way more important issues that are being ignored by the media to shut them up for a day.

  21. At least the proggies haven’t totally fucked up Virginia yet and the tax on a pack of smokes is still only 30 cents. No tax on vapes either that I am aware of, though I usually order mine online.

    Proggies love taxes that they don’t have to pay and vapers are the weird “other” to them. I think some years back Seattle tried to enact a small tax on coffee drinks and it was voted down by a huge margin. Mass. voters repealed a sale tax on beer recently too. If you tax something that proggies like, expect them to be anti-tax.

    1. Naturally. That goes without saying.

      They’re full of shit and couldn’t care less about the health of people or society.

      NIMBY and all that.

  22. RE: Pennsylvania’s New Tax on Vape Shops is Forcing Them Out of Business
    Both parties are to blame for a bill that’s also making it more expensive for smokers to switch to safer alternatives.

    Thank God for the Pennsylvania tax on vape shops!
    This way, the little people will not only be refused more choice, but more nefarious capitalist enterprises will die a horrible death they deserve.
    Socialist slavery marches on.

  23. Intentions don’t change the outcome

    This is precisely the intended outcome. Kill the vaping shops, and the state legislators keep getting that Phillip Morris money.

    -jcr

  24. This will only drive up out-of-state sales and Internet purchases. Pretty soon you’ll have people smuggling vape juice and other objects like they use to smuggle shine back in the day. Like they still do.

    1. +1 Colorado grow

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  26. So, not all vapers actually use nicotine; however, most (maybe all?) vape shops are small businesses. We simply cannot have a bunch of people selling things that other people want unless it is done by huge corporations donating huge bunches of money to get favorable legislation on things that should not be legislated at all. Listen up, everybody in Pennsylvania; move out of state by tomorrow!

    1. Took care of that eighteen years ago. It’s best to move out of the USSA.

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  30. Democrats tax and Democrats spend…I guess I was naive to think they’d never come after me. Should have listened to Conservatives. Now my business will be closing.

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  32. Bryce . even though Samuel `s story is unbelievable… on tuesday I bought a great Peugeot 205 GTi after making $4790 this – four weeks past an would you believe $10k last month . it’s definitly the most-comfortable work Ive ever done . I actually started 4 months ago and right away startad earning more than $85 p/h . find more info

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  33. my friend’s mom makes $67 an hour on the internet . She has been fired for five months but last month her pay check was $20360 just working on the internet for a few hours. view….
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  35. I recently reviewed the Federal Census stats on yearly driving fatalities state by state, from 1990 to 2009. All states, ‘legal’ or not, have seen their death rates drop, but on average, those with medical marijuana laws posted declines 12% larger than the non-medical states. Vehicles with airbags must have helped as well, consistently throughout the country, without affecting the disproportion between the ‘legal states’ and those ‘not yet, in 2009’.

    Marijuana has many benefits. Research at the University of Saskatchewan indicates that, unlike alcohol, cocaine, heroin, or Nancy (“Just say, ‘No!'”) Reagan’s beloved nicotine, marijuana actually encourages brain-cell growth. Studies in Spain and other countries have discovered that it has tumor-shrinking, anti-carcinogenic properties. These were confirmed by the 30-year Tashkin population study at UCLA.

    Marijuana is a medicinal herb, the most benign and versatile in history. “Cannabis” in Latin, and “kaneh bosm” in the old Hebrew scrolls, quite literally the Biblical Tree of Life, used by early Christians to treat everything from skin diseases to deep pain and despair.

    What gets to me are the politicians, prosecutors, and police who pose on church steps or kneeling in prayer on their campaign trails, but can’t face the scientific or the historical truths about cannabis.

  36. The state and cities never calculate the end result of losing tax revenue of the building, business tax, wage tax, employee wage tax, sales tax, etc etc . they just look at the potential. income from their first thoughts “what can we tax” estimating what will it bring in.
    next election just vote them out.

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