Senate votes to approve Tax Increase on E-Cigarettes

The senate approved the Omnibus bill, as expected.  The only two members to debate against the e-cigarette tax were Democrats.

Senator Ben Clark (D-Cumberland, Hoke) proposed an amendment to change the bill to lower the tax  and focus on the nicotine content instead of the volume of total liquid used in the e-cigarettes.  Senator Rabon (R-Bladen,Brunswick, New Hanover, Pender) then asked the Senate to oppose the amendment because the higher tax rate was already in the bill and there were no problems with the higher rate.  The amendments failed with a vote 12-37.

Here is the amendment language that was proposed.  The current bill taxes 5 cents per milliliter.

Tax on Vapor Products – An excise tax is levied on vapor products at the rate of three cents (3¢) multiplied by the percent of nicotine concentration in the consumable product, multiplied by the volume of the consumable product in milliliters, rounded down to the nearest whole cent.  All invoices for vapor products issued by manufacturers must state the amount of nicotine in the consumable product in milligrams, the volume of the consumable products in milliliters, and the percent of the nicotine concentration.

Near the end of today’s session, Senator Dan Blue spoke about the omnibus tax bill as a whole and brought attention to the unfair taxation of e-cigarettes.  The bill defines these products as vapor products, a tobacco product.  When the cigarette excise tax was being enacted throughout the country North Carolina was one of the last to enact this tax.  In the case of e-cigarettes, North Carolina is one of the first states to enact this tax.  Senator Blue mentioned that this tax’s intent is to align the tax system to replace the lost revenue from people switching from traditional cigarettes to e-cigarettes.  Yet when compared to the current tax on traditional cigarettes, the tax is not the same rate.  He asked for consistency in the tax law with regards to these products, something this new tax does not do.

So now we have Democrats asking to lower taxes or at least make them consistent with current tax policy and Republicans asking to keep them at a higher rate and enact new and inconsistent tax policy.  Wow – what a change from last year’s debate when all the Republicans could talk about were tax cuts.

Sarah Curry

Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation.

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