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Ohio Governor Wants to Nearly Triple E-Cigarette Taxes

This plan might take a smoker's breath away: The price to use electronic cigarettes could almost triple under a tax proposed by Gov. John Kasich.

By Maria DeVito

This plan might take a smoker's breath away: The price to use electronic cigarettes could almost triple under a tax proposed by Gov. John Kasich.

If the governor's proposed budget passes, the taxes alone on a 30-milliliter bottle of liquid nicotine used in e-cigarettes would be $33.75 -- the bottle now costs between $18 and $20, plus a sales tax. The additional tax would be a first for e-cigarettes, which aren't regulated by the Food and Drug Administration.

For the state, "It really is a matter of uniformity of tax for nicotine-delivery products," said Gary Gudmundson, communication director for the Ohio Department of Taxation. The budget also calls for increasing taxes on a pack of cigarettes by $1 -- to $2.25.

But businesses selling the products don't see it the same way as Gudmundson.

"That's the ultimate stab in the back to small businesses," said Gregory Conley, president of the American Vaping Association, which advocates for small and medium-size businesses in the e-cigarette industry.

Public-health advocates, meanwhile, hope the proposed tax means fewer people will use the e-cigarettes -- battery-operated devices that use nicotine to produce a vapor -- even though the product's safety is relatively unknown.

"This is an area we don't have a lot of data on right now on whether e-cigarettes are safe," said U.S. Surgeon General Dr. Vivek Murthy during a recent visit to Columbus. "We don't know, for example, what the health impacts are."

The state projects the new tax on e-cigarettes would generate $22.3 million during the two-year budget span. Overall, new taxes on nicotine products would bring in $844.5 million during that time.

Using e-cigarettes, also called vaping, became more popular in the U.S. market in 2007.

In the Ohio 2013 Behavioral Risk Factor Surveillance System, 19.2 percent of people said they had tried e-cigarettes at least once. Of that group, 56.8 percent were smokers, according to the Ohio Department of Health.

The liquid nicotine comes in various flavors such as menthol, cotton candy, bubble gum, chocolate, strawberry and even gummy bear.

Shelly Kiser, director of advocacy for the American Lung Association of Ohio, said taxing e-cigarettes would help curb use among teens.

In August, the Centers for Disease Control reported that 263,000 middle and high-school students, who had never smoked before, used e-cigarettes in 2013. The number was 79,000 in 2011 for the same group.

"A lot of young people are turning to these nontraditional forms of tobacco," Kiser said.

About a year ago, the Ohio legislature passed a bill prohibiting the sale of e-cigarettes to minors, but Kiser said teens find someone older to purchase the e-cigarettes for them.

Still, if the tax were implemented, Conley is concerned that shops would cut employees. In addition, Nicquid, a Miamisburg, Ohio-based liquid nicotine manufacturer, might consider moving its 60 jobs to a neighboring state, such as Kentucky.

Kentucky was one of 12 states that attempted to pass an e-cigarette tax in 2014; however, all bills failed to pass, according to "Tobacco E-News," a newsletter for tobacco and nicotine retailers.

Some states have found ways to tax the products, although some are not nearly at the rate that Ohio is proposing. North Carolina taxes liquid nicotine at 5 cents per milliliter, meaning that taxes on a 30-milliliter bottle would be $1.50, according to the National Conference of State Legislatures.

Minnesota taxes e-cigarettes and liquid nicotine by 95 percent of the wholesale cost, according to the Minnesota Department of Revenue.

Conley said that some smokers use e-cigarettes to help them quit. A survey released last month from the Minnesota Department of Health showed that 45.3 percent of smokers who had tried to quit in the past year used vapor products.

"We shouldn't tax the products that are even better at helping people quit," Conley said.

(c)2015 The Columbus Dispatch (Columbus, Ohio)

Caroline Cournoyer is GOVERNING's senior web editor.
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