Indiana Smoke-Free Alliance President Testifies in the Senate Appropriations Committee opposing taxes on e-cigarettes and e-liquid

NIKI KELLY | The Journal Gazette

The Senate Appropriations Committee heard testimony on House Bill 1444 that ran the gamut – some think the proposed tax too small; others think it should be applied using another method; manufacturers and wholesalers want the tax collected at the retail level and the retail level wants the tax collected earlier in the supply chain.

The panel will consider amendments and vote next week.

“These products are getting a new generation of kids addicted,” said Bryan Hannon, of Tobacco Free Indiana. “The Surgeon General calls it an epidemic.”

Eight states so far have a vaping tax of some kind though they approach it in several different ways.

The legislation calls for a tax of 4 cents per milliliter on e-liquids that contain nicotine and would be paid at the distributor level. It narrowly passed the House, and could bring in more than $3.6 million when fully implemented in 2021.

Hannon pointed out though that the most popular product on the market has little liquid and the tax would be small. He suggested a tax on the price at the retail level instead if there is to be a deterrent.

Julie Halbig, of the Indiana Hospital Association, agreed – saying a 24 percent tax would create parity with cigarettes.

But Joe Lackey, president of the Indiana Grocery and Convenience Store Association, said the state already has a model in place for taxing tobacco products at the distributor level and it makes no sense to put that on retailers.

“This bill also codifies internet sales and we don’t think that should be in the law,” he said.

Amy Netherton, of the Indiana Smoke-Free Alliance, opposed any tax at all. The Alliance represents many retailer and manufacturers in the vaping industry.

She said the industry is still recovering from a botched initial attempt at regulating vaping, and this would create an advantage for neighboring states that don’t have a tax framework.

Others who testified said the state should tax based on the weight of nicotine in the product rather than total volume.