House Committee Votes to Save Vape Shops

Member Group : Commonwealth Foundation

House Committee Votes to Save Vape Shops
Bipartisan Vote Would Repeal 40-Percent Tax, Replace with Per-Milliliter Tax

September 27, 2016, Harrisburg, Pa.—Today, the House Finance Committee voted 19-4 to repeal the 40-percent retroactive tax that is poised to drive hundreds of vape shops out of business and cost as many as 1,500 full-time jobs. The 40-percent tax will go into effect on vape shop inventories this Saturday, with crippling tax payments due 90 days after.

The legislation advanced today, HB 2342, sponsored by Rep. Jeff Wheeland, replaces the 40-percent tax with a 5-cents-per-milliliter tax. This change would raise revenue without driving vape businesses under.

"Vape shops owners don’t deserve to be taxed out of business to enable Harrisburg’s out-of-control spending," commented Bob Dick, senior policy analyst with the Commonwealth Foundation. "This tax unfairly targeted one industry to the point of near extinction. We’ve already seen approximately 50 vape shops close their doors because of this tax, and more will follow unless it is repealed."

The 40-percent retroactive tax on vape shops, which lawmakers and Gov. Wolf approved this summer, purportedly would have raised $13 million in revenue for the state, just 2 percent of the $650 million tax hike package the governor signed into law. With vape shops closing or selling off inventory as a result of the tax, however, tax revenue will fall far short of predictions.

"It’s unconscionable that Harrisburg was willing to drive Pennsylvanians out of their businesses and out of their jobs for $13 million in revenue while at the same time handing out millions in state subsidies to multi-billion-dollar corporations like Amazon and Netflix." Dick continued. "Today, the House Committee took a critical first step toward righting this injustice. We urge the full House to act swiftly to pass this legislation and send it to the Senate and, ultimately, to Governor Wolf for his signature before even more vape shops are forced to shutter their doors."

Click here for additional background on the vape tax and proposed legislative solutions.

Bob Dick and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or [email protected] to schedule an interview.
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