Gov. Phil Scott on Thursday threw his support behind a 92 percent wholesale tax on e-cigarettes, giving a boost to a proposal that has failed to get through the Legislature over the past few years.
The levy would bring an estimated $1 million into state coffers. But proponents portray the move as a public health initiative as surveys show more young people trying and regularly using electronic nicotine-delivery devices.
“Our kids must know the dangers of these behaviors, and we should stop it in its tracks,” Scott said in his fiscal year 2020 budget speech.
Health advocates praised the idea. But the proposal was immediately panned by the American Vaping Association, an advocacy group that argues e-cigarettes are an effective stop-smoking option for adults.
“Gov. Scott was elected on the promise of making Vermont more affordable for its citizens, but apparently that pledge only extends to people who work in industries that he approves of,” said Gregory Conley, the group’s president. “Prior attempts at vapor product taxes in Vermont have sought to tax devices that don’t even contain nicotine, and if the same holds true in 2019, this will be the worst, most regressive vapor tax in the nation.”
E-cigarettes deliver nicotine via heated liquids rather than tobacco smoke. While some say e-cigarettes are a safer alternative to smoking, the devices are causing increasing alarm among health advocates due to increasing use among students in middle school and high school.
In his speech on Thursday, Scott transitioned from the opioid epidemic directly to e-cigarettes, which he called “another threat to public health.” Supplemental budget materials distributed by the Scott administration said use of e-cigarettes among Vermont youth “has increased sevenfold between 2011 and 2017.”
Scott departed from his well-publicized aversion to raising taxes to endorse an e-cigarette tax as a way to address the problem.
“I think you all know it’s not my first instinct to add a tax, but with a growing health risk for our kids, I’m proposing to levy the same tax as we do on tobacco products,” Scott said.
Vermont has a variety of tobacco taxes. A spokesperson later confirmed that Scott was referring to a 92 percent tobacco wholesale tax imposed by the state.
State Human Services Secretary Al Gobeille said the tax could be a “game-changer” to curb youth use of e-cigarettes. “This governor does not like taxes, but he’s also a dad,” Gobeille said. “This is one of those (taxes) even he supported.”
Scott’s support was music to the ears of state Rep. George Till, D-Jericho. He has proposed a bill, H.47, that would levy the 92 percent wholesale tax on “products sold as a tobacco substitute … including any liquids, whether nicotine-based or not, or delivery devices sold separately for use with a tobacco substitute.”
Till said the growth in youth use of e-cigarettes means “we are at definitive risk of undoing the progress we’ve made against tobacco over the past 50 years.”
“I think it’s wonderful that the administration agrees that we have a crisis,” he said.
The Scott administration said revenue from the new e-cigarette tax would feed the state’s general fund. But Till said he’s not concerned about where the money goes.
“I care about the fact that we know that teenagers are the most price-sensitive consumers,” he said. “And we need to make it so that fewer teenagers are able to do this.”
The 2017 Vermont Youth Risk Behavior Survey reported that 34 percent of high school students said they had tried an electronic vapor product, with 12 percent reporting current use. The survey also found that 9 percent of Vermont middle school students had tried an electronic vapor product, up slightly from 2015.
Nationally, 3.6 million middle and high school students use e-cigarettes, according to a November statement by U.S. Food and Drug Administration Commissioner Scott Gottlieb, an increase of 1.5 millions students than in 2017.
Dr. Mark Levine, the state Health Department commissioner, said his focus also is on youth use of electronic vapor products. “They have brains that are developing, and nicotine addiction is most profound, in terms of its effects, on the developing brain,” Levine said after the governor’s speech.
However, Levine also raised concerns that “we are going to have an epidemic of adults who are now addicted to (e-cigarettes) because they got addicted early in life.” And he’s not convinced that vaping helps large numbers of people quit smoking.
“The literature basically has come out divided on that,” he said. “We don’t have the reassurance, necessarily, that we’d like to say that this is definitely a good smoking-cessation aid.”
The American Vaping Association disagrees.
“Combating youth vaping is a sound goal, but so is helping adult smokers quit,” Conley said. “Gov. Scott should listen to FDA Commissioner Scott Gottlieb, who recently declared that it would be a ‘tremendous public health gain’ if all adult smokers switched to vaping. By imposing a tax so high that it will shut down many or all of Vermont’s existing vapor retail stores, Gov. Scott is breaking his promise to voters and leaving adult smokers behind.”
Vermont lawmakers have considered e-cigarette taxes in each of the last two legislative bienniums.
A 92 percent tax passed the House but didn’t get through the Senate in 2016. The two bodies agreed on a 46 percent tax last year, but it didn’t ultimately pass because it was coupled with a controversial levy on manufacturers of prescription opioids.
On Thursday, Senate Pro Tem Tim Ashe said “there’s been a lot of enthusiasm” for moving forward with an e-cigarette tax. Ashe also said he was surprised by Scott’s support for the tax, saying it “would have been unusual to have heard that message the last couple years.”
“That money, in turn, can be used for many very good public health investments, which is appropriate,” Ashe said.
If the measure backed by Scott is approved, Vermont would be the fourth state to enact a wholesale tax on e-cigarettes. California, Minnesota and Pennsylvania have already done so, as has Washington, D.C.
Six other states have enacted per-milliliter taxes on e-cigarette liquids. They are Delaware, Kansas, Louisiana, New Jersey, North Carolina and West Virginia.