Legislators in Hawaii enacted a "tax parity" bill on Friday, which subjects vaping goods to the same tax rate as traditional cigarettes. Vaping items would be subject to one of the highest wholesale tax rates in the nation, 70 percent if Governor Josh Green signs the legislation into effect.
Additionally, the bill forbids out-of-state shops from selling to consumers, thereby outlawing online sales by vendors outside of Hawaii.
Just before the conference deadline for this year's legislative session, the State House and Senate produced a lengthy conference bill, SB975 SD2 HD3, which defines vapes as "tobacco products." On May 4, the legislative session ends.
When the bill will be sent to Governor Green is unknown, as is the likelihood that he will sign it. Should the tax be ratified, it will go into force on January 1, 2024. Hawaii does not currently impose taxes on vaping goods.
Although tax parity is intended to deter underage vaping, health economists' research indicates that it instead promotes smoking, in part because it removes the affordability factor that attracts many smokers to e-cigarettes. When the cost of one climbs, nicotine consumers switch to vapes, which function as cost-effective alternatives to cigarettes.
Earlier in this legislative session, a bill that would have prohibited flavored tobacco and vaping goods in Hawaii was defeated in committee along with another tax bill. Hawaii enacted a flavor ban last year, but Gov. David Ige vetoed it because he agreed with tobacco control and anti-vaping organizations that the law wasn't stringent enough.
Minnesota has the highest vape tax rate in the United States (95%), however it only applies to items containing nicotine that are imported from other states. Vermont comes in second, accounting for 92% of the wholesale price of all goods, even those free of nicotine. The District of Columbia levies a 91 percent tax on vapes. In addition to imposing a 75 percent wholesale tax on all goods, Massachusetts has outlawed flavored vape pens. California levies taxes that are similar to those in Hawaii (a mix of wholesale and retail taxes). Not a single state has a wholesale tax that is seventy percent or more.
Eight more states forbid the sale of vaping goods online.
