Borough mayor vetoes tax on vapes, e-cigs

PALMER — Mat-Su Borough Assembly members and the public will get a second chance to discuss adding e-cigarettes and vaporizers to the list of tobacco products eligible for the borough’s tobacco tax.

Borough mayor Larry DeVilbiss issued his first 2015 veto outside of the budgeting process to strike down an ordinance change which would have added e-cigarettes and vaporizers — known as vapes — to the list of borough-defined tobacco products, meaning the liquid tobacco recharges and the vaporizers would both be subject to a 55 percent wholesale excise tax for non-cigarette tobacco products. The veto is on the agenda for the September 1 assembly meeting. The original measure passed by a 5-1 vote. Five votes are needed to override a veto.

A starter vaporizer retailing at about $55 dollars would thus cost about $85 under the ordinance.

The state does not presently tax e-cigarettes or vaporizers. The borough already taxes various types of cigars, chewing tobacco, pipe tobacco and snuff at the 55 percent rate.

DeVilbiss said he issued the veto over concerns about the public process after local business owners called him about the measure.

“I didn’t catch it ahead of time, but after several calls after it was over, I realized that the industry wasn’t aware of what was going on just from the title that was used to advertise it,” he said. “It talked about definitions of tobacco products and taxes, nothing that would cause anybody that was selling e-cigarettes to sit up. That was quite evident from the testimony we received around the table.”

Meetings and regulation can sometimes be broad, DeVibliss said. For example, a meeting the afternoon before the tobacco ordinance was passed was described simply as “Strategic Opportunities,” without further clarification.

“I think when it involves internal plans that don’t directly involve other stakeholders, it may not be as necessary,” DeVilbiss said. “The more specificity we can get in our titles, the better everybody is served.”

The debate puts the borough in the middle of a larger debate over vapes, particularly what constitutes a vape.

The devices vaporize a combination of liquid nicotine extracted from tobacco leaves, the preservative propylene glycol, and artificial flavoring at temperatures which manufacturers say don’t generate the same harmful chemicals as smoking – though some vapes do contain tobacco leaves. Electronic cigarettes and vaporizers use an identical mechanism to generate inhalable vapor instead of burning tobacco. Vaporizers have grown to surpass the original e-cigarettes as a majority share of the market.

Fine distinctions separate the two products. E-cigarettes are not refillable, whereas vapes can be refilled or adjusted to meet the desires of the consumers.

The U.S. Food and Drug Administration, which is considering expanding its jurisdiction to include vaporized liquid nicotine, points out that a lot about the products remains unknown. The American Lung Association has expressed concern about the use of e-cigarettes among young people, according to its website.

Even studies generally viewed as favorable to vaping — like a report issued by Public Health England, part of the United Kingdom’s National Health Service — point out that the effects of long-term exposure to inhaled propylene glycol aren’t well understood.

“In a nutshell, best estimates show e-cigarettes are 95 percent less harmful to your health than normal cigarettes, and when supported by a smoking cessation service, help most smokers to quit tobacco altogether,” the foreward to the study reads in part.

Some smokers who were unable to quit using traditional methods were able to quit using vaporizers, according to the report.

Those that work in the industry — like Dave Glenn of Fatboy Vapors, located at 1261 South Seward Meridian Parkway – generally say their product is poorly understood, and that adding the tax on top will crush livelihoods. They’re also concerned that one provision of the new law — “any noncombustible device that provides a vapor of liquid nicotine to the user or relies on vaporization of any liquid or solid nicotine” — would tax vaporizers, while traditional tobacco pipes aren’t included under the same tax.

“The problem is, the only product we have that actually has nicotine it would be the e-liquids themselves,” he said. Everything else that we carry in our store would also have the 55 percent wholesale tax. We’re talking about a plastic case to hold a couple of batteries that are also used in flashlights. “Chargers that are also used for batteries that are used for just about any product you can throw a stick at.”

Others, like Mark Lords, who works at the counter at Alaskan Sweet Vapes LLC, are more blunt.

“They’re trying to tax it with the point where it’s no longer affordable,” he said. “It’s going to raise the prices on everything, which is then going to drive business down. Anyone who buys local isn’t going to want to buy local if there’s a 55 percent sales tax on everything. They’ll take their business over the Internet. That’s going to drive the economy for the small business man and the Mat-Su Borough in the state of Alaska, that will literally drive the economy down the hole."

Contact Reporter Brian O’Connor at 352-2279, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.