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Vermont imposes 92% tax on e-cigarettes

E-cigarette use among youth rising sharply
  • E-cigarettes are now subject to a 92% tax in the state of Vermont.
  • The bill is aimed at curbing youth vaping.
  • E-cigs and other tobacco-substitute products will be taxed at the same rate as snuff an pipe tobacco are.

A 92% tax on e-cigarettes went into effect in Vermont Monday as part of an effort to curb youth vaping in the Green Mountain State. 

State Rep. George Till, who sponsored the tax increase bill, said the measure will help keep tobacco products out of the hands of kids, who are most affected by price hikes.

"We know the group that is most sensitive to price is teenager," he told CBS MoneyWatch. "And we know that these companies are going out of their way to get kids addicted." 

The new tax, which passed in February, will not effect packs of cigarettes, which will still be subject to a $3.08 tax. E-cigarettes and other tobacco-substitute products, including those "intended for human consumption by smoking, chewing, or in any other manner," were previously subject to the state's standard 6% sales tax.

Ninety-two percent is the same rate at which snuff -- a form of smokeless tobacco -- and pipe tobacco are already taxed.  "We are trying to keep the tax across all nasty things the same," Till said. 

E-cigarettes were previously cheaper than combustible cigarettes, but will now cost roughly the same amount. 

Two additional bills aimed at controlling youth e-cigarette usage also went into effect Monday in Vermont. The first raises the legal age for purchasing and using cigarettes, e-cigarettes and tobacco products to 21 from 18. The second restricts retail and internet sales of "tobacco products, tobacco substitutes, substances containing nicotine or otherwise intended for use with a tobacco substitute, or tobacco paraphernalia" unless the vendor is a licensed wholesale dealer or has purchased the products from a licensed wholesale dealer. 

San Francisco becomes first U.S. city to ban e-cigarettes

Till, who is also a physician, said the measures form a three-pronged effort to restrict vaping of nicotine until its health effects are better understood. 

"To say that e-cigarettes are safer is pretty non-sensical. There are many of these types of devices and it will be a long time before we ever know if they are safer. My bet is that we will find some devices are safer, and some are more dangerous. But we don't know that yet," he said.

Till said in his floor speech that while the tax bill will raise a small amount of revenue, it is chiefly a population health bill. 

Vermont follows the city of San Francisco in taking a stand against e-cigarettes, citing lingering questions around their long term health impacts.

San Francisco last week became the first city to ban the sale, distribution and manufacturing of vaping products, pitting it against hometown startup Juul, with sales of about $2 billion.

Juul claims the ordinance will "drive former adult smokers who successfully switched to vapor products back to deadly cigarettes." It will also "deny the opportunity to switch for current adult smokers, and create a thriving black market instead of addressing the actual causes of underage access and use," the company said in a statement to CBS MoneyWatch.

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