The vaping industry worries that 70% tax hikes could kill businesses.

Rep. Scot Matayoshi has been trying to fight e-cigarettes for four years. This year, Matayoshi and other lawmakers have a new approach: tax electronic smoking devices and e-liquid products at a rate of 70%.

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Right now, e-cigarettes only have the general excise tax of between 4.1% and 4.7% attached to them. Combustible cigarettes sold in Hawaii carry other taxes.

“Vape shops are gonna have to raise their prices or go out of business,” Matayoshi said. “When you’re selling a really addictive substance, I’m not sure if I have that much sympathy.”

He said that the 70% tax proposed under House Bill 537 will bring vaping into tax parity with cigarettes and other nicotine products that already carry taxes in addition to the GET. As of 2022, 696 electronic smoking device retailers are registered in Hawaii. Matayoshi aims to reduce negative health effects among the community by making vaping more expensive. 

“Nicotine is about as addictive as heroin, but we are selling (nicotine) over the counter, and (it) has many negative health effects that we, as a society, will have to deal with down the line,” he said.

But increased prices may not deter everyone. Dylan Higa, who was outside a local coffee shop and smoking from two vaping devices, said he may still buy those products.

Vape Hawaii sign Vape shop.
Hawaii lawmakers want to tax e-cigarette products at rates of 70%. (Cory Lum/Civil Beat/2019)

“Even if vape prices increase, I’m still going to buy it because I’m already addicted,” the local 30-year-old said, adding that he has been vaping for five years and spends around $80 to $100 on e-cigarettes per month.

Higa said that people are still smoking cigarettes even though they are expensive and doesn’t believe raising vape prices will necessarily stop people from vaping either.

Steven Greenhut, the Western region director of the research organization R-Street Institute that does work in tobacco reduction, opposed the legislation during a recent hearing in the House.

“We fear that raising taxes on vaping will discourage people who smoke from switching to a less dangerous product,” Greenhut told the House Commerce and Consumer Protection Committee.

He cited a government study from England that found vaping is 95% less harmful than smoking combustible cigarettes.

“E-cigarettes provide a promising off-ramp for nicotine-addicted combustible cigarette users,” he said. “Over-taxing will not reduce nicotine addiction.”

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The Centers for Disease Control and Prevention stated that while e-cigarettes are not considered safe, they are still less harmful than cigarettes and contain fewer toxic chemicals than regular cigarettes.

Scott Rasak, a representative of VOLCANO eCigs, described the 70% tax as an industry killer.

“Some of the bills they’re putting forward are ending people’s businesses and livelihoods that they spent the last decade building,” he said in an interview.

Rasak said that he wishes the Legislature would work more with the vaping industry to understand how it can make a positive impact on the community, instead of “targeting retailers that are responsible in selling the products under legal provisions.”

Matayoshi introduced flavor vaping bans for the last three years. Last year, one of his bills to ban flavored tobacco products including e-cigs passed the Legislature but was vetoed by former Gov. David Ige. Matayoshi introduced a similar bill again this year.

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