Montgomery County Council Proposes E-Cigarette Tax

Montgomery County Council Proposes E-Cigarette Tax

New excise tax would apply to distributors of vapor cigarettes

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Update – 11:20 a.m. – The County Council this morning introduced a bill that would tax distributors of e-cigarettes at 30 percent of the wholesale cost of the products.

The tax would apply to all distributors that sell vaporizers and other products that use liquid nicotine to create vapors simulating smoking to local retailers.

E-cigarettes have exploded in popularity since entering the market in earnest about five years ago. In 2014, industry watcher Research and Markets estimated the e-cigarette market at about $1.5 billion. The health of effects of vaporized nicotine have not been rigorously researched and currently there is no government oversight of the products.

The American Lung Association wrote in a March statement about the possible negative effects of the products that it is “concerned about e-cigarettes becoming a gateway to regular cigarettes, especially in light of the aggressive industry marketing tactics targeted at youth—including the use of candy flavors and the glamorization of e-cigarette use. Studies are showing a dramatic increase in usage of e-cigarettes, especially among youth.”

Two states, North Carolina and Minnesota, have approved taxes on vaporizers and e-cigarettes. Minnesota taxes e-cigarettes at 95 percent of the wholesale cost, while North Carolina taxes the products at 5 cents per milliliter of liquid nicotine.

The proposed tax in Montgomery County is seen as a way to add a new stream of revenue, according to documents filed with the council. Councilmember Tom Hucker is the primary sponsor of the the bill, which is co-sponsored by councilmembers George Leventhal, Roger Berliner, Hans Riemer, Nancy Floreen, Sidney Katz, Marc Elrich and Nancy Navarro.

"The goal of this legislation is to update our tax code to keep up with a rapidly evolving industry," Hucker said when the bill was introduced Tuesday.

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