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12/16/2021

U.S. Senate Drops Proposal to Tax Vaping Products

Nearly half of the states and Washington, D.C., have already implemented a levy.
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a vapor product

WASHINGTON, D.C. — A federal tax on electronic cigarettes and vapor products will not become a reality.

Democrat lawmakers in the U.S. Senate shelved the proposal to implement the tax. According to The Wall Street Journal, the decision came as lawmakers are trying to wrap up the $2 trillion Build Back Better package.

The levy was part of The Tobacco Tax Equity Act. If it had moved forward, the federal government would have followed the lead of close to half of the states and Washington, D.C., which already tax e-cigarette and vapor products.

The measure would have taxed vaping products, including e-cigarettes, vaping liquids and oral nicotine pouches, similar to the existing federal cigarette tax rate of $1.01 a pack. However, it would have based the tax on volume of nicotine in the products, meaning in many cases they would have been taxed even higher than cigarettes, according to NACS.

NACS opposed the provision.

"While proponents of the vapor tax intend for it to ultimately dissuade users and provide additional revenue, an increase of such substantial proportion will have the opposite effect and push users to a burgeoning illicit market," said Anna Ready Blom, NACS director of government relations. "Operating completely outside of the law, illicit sellers through their channels distribute unregulated products to users of all ages."