An e-cigarette tax adopted this month as part of the state budget is tied for lowest among at least 20 states in which vaping taxes have passed, according to a new report.
Had the Legislature gone with Gov. Tony Evers’ original proposed tax, it would have been the third-highest, the report found.
The Wisconsin Public Health Association urged Evers, a Democrat, to veto the lower tax, approved by the Republican-controlled Legislature, saying it’s not large enough to discourage e-cigarette use.
Evers, who made 78 partial vetoes in signing the budget, left the lower e-cigarette tax intact. The veto process didn’t allow him to restore the higher tax, and he kept the lower tax because it was a compromise by the Legislature, Evers spokeswoman Melissa Baldauff said.
Starting Oct. 1, the state will impose an excise tax of 5 cents per milliliter of vaping fluid. Evers had called for a 71% tax of the manufacturer’s list, or wholesale, price for vaping fluid and devices, the same amount the state applies to non-cigarette tobacco products.
Four states tax only vaping fluid and levy 5 cents per milliliter, according to a Wisconsin Policy Forum report released Friday. Minnesota has a 95% tax and Vermont has a 92%.
Illinois started a 15% e-cigarette tax July 1.
On a 30-milliliter bottle of e-cigarette fluid costing $19.99, Wisconsin’s new law will levy a $1.50 tax. Evers’ proposal would have yielded a tax of $14.19.
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Wisconsin’s tax on regular cigarettes of $2.52 per pack is 12th-highest among states, the report said.
E-cigarettes and other vaping devices vaporize liquid nicotine. They don’t carry the harmful risks of combustible tobacco, as cigarettes do, but can expose users and others to heavy metals and chemicals, health officials say.
E-cigarettes are touted as a way to help adult smokers quit cigarettes. But health authorities are concerned about their growing use among youths, saying it can lead to cigarette smoking.
Some 20% of Wisconsin high school students said last year they were using electronic cigarettes, up from 8% in 2014 — an “alarming” increase that led the state Department of Health Services to issue an advisory in January.
The Wisconsin Public Health Association said the 5-cent tax is “nowhere near parity with taxation on cigarettes,” as the 71% tax was meant to achieve.
“While any tax on e-cigarettes may on the surface seem like good policy, this particular tax does not seriously or adequately attempt to solve the problem facing the state,” the group said in a statement. “Wisconsin deserves a real discussion and a real solution, not this ‘tax-in-name-only.’”
The new tax is projected to raise $5.5 million over the next two years, compared to $34.7 million that would have been raised under the 71% tax, according to the Legislative Fiscal Bureau.
Wisconsin’s cigarette tax revenue is declining because smoking rates are going down, the new report said. The state collected $539 million from cigarette taxes in 2018, down from $644 million in 2010.