Senator Tom Killion (R-9) today introduced legislation that would give businesses who sell electronic cigarettes and vape shop owners an extension on the time they have to pay a new tax, known as “a floor tax” that was enacted as part of this year’s budget revenue package.
Beginning on October 1, a 40 percent wholesale tax will be levied on all vapor products in Pennsylvania, including smoking devices and liquids. In addition, a 40 percent inventory tax must be paid by December 30. Killion said this tax could put many small businesses out of business, cost the state jobs, and hurt local economies.
“Since the enactment of Act 84 of 2016, I have been contacted by electronic cigarette and vape shop business owners throughout the 9th Senatorial District, who have expressed concerns with the 40 percent tax imposed on electronic cigarettes and vaping equipment,” Killion said. “They believe this tax is unfair, onerous and could force small businesses to close their doors. We need to address this situation now – before it is too late.”
Killion’s proposal would give shop owners more time to sell their inventory so that they can obtain revenue to pay the tax due or make alternative financing arrangements to meet their tax obligation.
“The floor tax forces some small business owners to pay the 40 percent tax on expensive hardware that they have not been able to liquidate. In some instances, vaporizers can sit on the shelves for several months. These small business owners see this as a significant burden, requiring a substantial amount of cash,” said Killion.
“Shop owners believe that the impact of the floor tax is especially problematic because they do not move the vaping hardware inventory quickly,” said Shawn Rogers, owner of the Boogaloo Vape Shop, with two locations in Media and Boothwyn. He met with Senator Killion recently and shared his own personal experience.
“Since my meeting with Senator Killion, 50 shops have already closed their doors for business,” he added.
Killion said there are hundreds of these shops in Pennsylvania that provide thousands of jobs and offer a service to customers.
“Senate Bill 1362 will help these small businesses, which contribute to our economy,” Killion said. “If these stores close, consumers will go to the Internet or out-of-state. Pennsylvania will only lose that happens.”
Act 84 of 2016 was signed into law by the Governor on July 13, 2016. This proposal would have no adverse budget implications.
CONTACT: Office of Sen. Killion: Mike Stoll (717) 787-4712