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October 01, 2016

In effort to save Pa.'s vape shops, house committee repeals 40% tax

In an effort save dozens of vape shops from potentially closing their doors, the Pennsylvania House Finance Committee voted to repeal a 40 percent retroactive tax with 5-cents-per-millimeter tax – a retail tax on vaping liquid – earlier this week.

The original bill would have charged owners at Pennsylvania's 300 vape shops – who employ 1,500 people – a 40 percent wholesale tax on e-cigarettes and vaping products. It would have gone into effect Saturday. 

House Bill 2342, which advanced Tuesday, was sponsored by Rep. Jeff Wheeland and passed 19-4. 

“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 in a statement. “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We’ve already seen approximately 50 vape shops close their doors because of this tax, and more will follow unless it is repealed.” 

Gov. Wolf approved the 40 percent tax this summer and was passed by the General Assembly as a part of the 2016-17 budget. It would have raised $13 million in revenue. Though, the finance committee predicted that the number would fall short – it didn't consider the store that would have to close because they couldn't afford the tax, according to the Commonwealth Foundation.

“This isn’t simply business owners concerned with a slight tax increase,” said Chris Hughes, owner of Fat Cat Vapor Shop in Montoursville, Pennsylvania in a statement. “This is literally our businesses, our livelihoods, and our employees’ livelihoods being crushed. Imagine if you were told that on October 1, you would have to pay a 40 percent tax on everything you own. This is a bullseye on our specific industry, and I’m glad lawmakers realize this and are working to reverse it.”