Massive Tax Hikes Threaten Vaping in Pennsylvania

March 11, 2017 4 min read

Massive Tax Hikes Threaten Vaping in Pennsylvania

Massive Tax Hikes Threaten Vaping in Pennsylvania

By Tatyana Dyachenko

The vaping community all over America is constantly trying to jump over numerous hurdles dead set against its growth and expansion. The biggest one being almost repressive regulations stifling the vape market and bringing it to its knees. Vaping in Pennsylvania is not exempt in this crackdown and is under threat from massive tax hikes which will take effect from October 2016. The anticipated business closures are massive and will lead to a serious economic loss for vape shop owners and loss of employment and income.

Vaping in Pennsylvania: The death of a business

Many States across America have been victims to such big opponents like Big Tobacco loyalists, political opportunists and strategists etc. Across the board many States with vape shops are slowly being choked and being forced to heal or die off because of over regulation. In Indiana for example they are reports that the FBI has to step in as there have been regulations that have raised red flags as to their motives. Many analysts are citing political motives and potential cronyism as chief reasons leading to the clampdown on vape shops in the State. Closer to home in Pennsylvania vape shop owners are gearing up for impending hard times and are trying to sell off as much merchandise as they can before the new tax hike hits. This tax hike will not only affect vapers as cigarettes are set to get a steep tax hike as well though however vapers will definitely be taxed more.

The direct result of this law is that small businesses are now preemptively closing before the new tax law comes into effect as it will burden them with a huge tax obligation that will eat into their profits and possibly leave them in debt. One such shop is Fat Cat Vapor , its owner Chris Hughes spoke to Penn Live about this issue. Hughes story is of a man who had found his passion in his work after many years of doing okay  at other jobs, he had found his greatest calling when he opened his vape shop and that was the one job in his life he had loved. The very idea that now he had to let go of his livelihood and passion seemed unfair and was heartbreaking. He felt that the new law was designed to kill off small businesses as this tax burden was too onerous for anything but a big business to be able to shoulder it. He had begun to sell off his stock, artwork and furnishings in efforts to get ahead of this law and liquidate as much as he could. Fat Cat Vapor led the curve by being one of the first companies to announce its closure but projections were that it would not be the only as many were set to follow suit. These are definite;y sad times in Pennsylvania for the vaping community.

The taxing cost of Vaping in Pennsylvania

The tax reforms set to take effect are to increase floor tax which has prompted businesses to contemplate shutting down. A floor stocks tax is a one-time excise tax placed on a commodity undergoing a tax increase. The amount of the floor stocks tax is equal to the difference between the new tax rate and the immediately prior tax rate. Any person who holds tobacco products (except large cigars) or cigarette papers or cigarette tubes and other tobacco products which now also encompasses vaping This includes, for example, wholesale and retail dealers, as well as manufacturers and importers who are holding tax paid or tax determined products. This means it will not only affect new stock coming in but also stock already on the so-called floor. In effect retailers will have to pay double tax in the end which in all reality will cut into most of their profits and cripple their business.

Let's move away for a bit from the economic impact of this law to a more health oriented side of it, or rather lack thereof. Many who are familiar with vaping have been following studies and chatter that points to the fact that vaping has become the go to nicotine replacement therapy with the highest chances of efficacy. Many vapers were ex-smokers and have sworn to the fact that since they started vaping they successfully managed to kick their smoking addiction. An unfortunate consequence of these tax hikes in Pennsylvania will mean a rise in smoking and an increase in the number of cigarette dependent consumers who could have been saved by the life-saving alternative which is vaping. This will in turn create a huge health burden on the State to address cigarette related illnesses one factor that had been on the decline with the introduction of vaping offering a cleaner alternative vice. So businesses will shut down and the smoking populaces health prospects will also subsequently diminish as this tax hike rears its ugly head.

This massive tax hike can only spell doomsday for vaping in the state of Pennsylvania, another blow to a market that is fielding all sorts of attacks all over America from its bigger and stronger competitors. A lot still needs to be done to ensure that this dangerous over regulation of the vaping marketplace ends and stops black markets sprouting which will definitely cause more harm than good. A healthy middle ground has to be found to allow healthy competition and to protect small vaping businesses specifically in Pennsylvania and all across America.

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