Tax vaping, tobacco products to curb youth smoking, committee told

Health officials and business owners told a state legislative committee the only way to curb Indiana’s increase in smokeless tobacco usage is to tax and regulate vaping products such as those sold by Juul.

With a smoking rate that’s 50 percent higher than the U.S. average and 327 percent increase in the number of young people using e-cigarettes, the state needs a 24 percent tax on vaping products, said Kevin Brinegar, president and CEO of the Indiana Chamber of Commerce.

Brinegar testified Tuesday before the Interim Study Committee on Fiscal Policy, which heard more than two hours of testimony about vaping and tobacco use. He cited studies showing that Indiana has the third-highest rate of e-cigarette usage in the nation and ranks 44th worst in nicotine use among all 50 states.

Dr. Lisa Hatcher of Columbia City described how a few weeks ago she had an eighth grader in her office who was trying out for the football team.

“I asked him about smoking and he said ‘no,’ and I asked him about vaping and he said ‘no,’” she said. “And I said ‘OK, how about Juul-ing?’ ‘Well, yes.’ I said ‘how many pods do you Juul a day?’ ‘One, sometimes two.'”

“Ladies and gentlemen, he is smoking more than one to two packs of cigarettes a day in terms of nicotine content. That is damaging his blood pressure. That is damaging his blood vessels. That is putting him at risk for long-term tobacco use.”

Hatcher said she is advocating for high taxes on e-cigarettes and other smokeless tobacco products because of her encounter with students like that eighth-grader. She noted that other states have imposed substantial taxes on tobacco and related products and as a result, the usage rate has dropped.

“We need to get on that bandwagon and we need to urgently,” she added.

Business owners, however, fear that high taxation will instead create a black market for the products, taking away their business and the ability to tax consumers who buy the products.

Mason Odle, a business owner and the vice president of the Indiana Smoke-Free Alliance, opposes a tax on vape products. But he said his group, a vaping industry trade association, believe a nicotine cap should be in place to deter the youth from using products like Juul to get a “quick buzz” caused by the high levels of nicotine.

When asked if Juul should be eliminated altogether, Odle, owner of two vape shops, said doing so would have a positive impact on the industry.

“No single policy measure is going to adequately address this epidemic,” Nick Torres, from Tobacco Free Indiana, told members of the study committee.

He advocated for taxing e-cigarettes in the same way all other tobacco products are taxed, as well as taxing the actual devices as if it were a tobacco product. Tobacco products have a 24 percent tax.

Torres hopes to deter youth from using these products with a higher tax. But some lawmakers don’t think that is enough.

“I’m very interested in using the tax system to send signals to people. In this case, I want people to understand that vaping is bad and some types of vaping are worse.” Rep. Ed DeLaney, D-Indianapolis, said.

The committee is expected to develop recommendations for legislation that would be considered in the 2020 session of the General Assembly.

At least 1,300 people suffering from vaping-related diseases, including 75 cases in Indiana, have been reported across the country, according to the Centers for Disease Control and Prevention. Doctors say the illnesses, which first appeared in March, have symptoms such as severe shortness of breath, fatigue, and chest pain. Most who got sick said they vaped products containing THC, the marijuana ingredient that causes a high, but some said they vaped only nicotine.

Some Indiana vape shop owners maintain a “punitive” tax would only push adults away from a product that can help them stop smoking cigarettes.

“The legitimate vaping industry should not be targeted because of irresponsible actors and black-market products,” said Shadi Khoury, the owner of Indy E Cigs, a 10-store chain with locations in Indianapolis, Bloomington and Terre Haute.

Indiana legislators this year considered imposing a 20% tax on vaping liquids, aiming to reach a tax level similar to the state’s 99.5 cents per-pack cigarette tax. Another proposal would have set a 4 cents per-milliliter vaping liquid tax. Both proposals were estimated to bring in at least $2 million a year in tax revenue.

Such taxes vary widely across the country, such as Minnesota charging a 95% tax, Illinois a 15% tax and Wisconsin a 5 cents per-milliliter tax, according to the Washington-based Tax Foundation.

Torres, the American Lung Association of Indiana’s advocacy director, argued teenagers are particularly sensitive to price increases and that a tax on vaping liquids should at least match what is charged on cigarettes.

“We would really urge that this is not an arbitrary amount, that this is a significant amount, that it has a bite on the end user, particularly among youth,” Torres said.

Health advocates say teenagers who vape are more likely to become cigarette smokers. That worries them as Indiana’s 21.8% smoking rate among adults was the 7th highest in the country for 2017, according to the CDC. Surveys for the Indiana State Department of Health found 18.5% of high school students had vaped in the past month in 2018, up from 10.5% in 2016.

The legislative committee could vote Friday on whether to recommend adopting a vaping tax, but it would need to win approval from the Republican-dominated Legislature during the 2020 session that begins in early January.

Senate health committee Chairman Ed Charbonneau, who sponsored the vaping tax bill last session, said he didn’t know whether the prominent health concerns about vaping improve the likelihood of a tax being approved. Charbonneau said he was concerned about widespread vaping among teenagers and was considering legislation to limit vaping flavors, which Michigan officials have attempted to ban.

“It raises the question: are the flavored vaping materials directed at helping people stop smoking or creating new vapers?” said Charbonneau, a Republican from Valparaiso. “There are going to be some very strong feelings on both sides of that issue.”