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In 2013, after planning and saving for a year-and-a-half, I opened my first business, Fat Cat Vapor Shop in Montoursville. I’d overcome many challenges and assumed some gut-wrenching risks to get there, but I did it – and I was proud. But less than three years later, my business – my dream – is on the brink of shutting down.
It’s not that I lack customers, or have too much competition, or have mismanaged my business. No, my shop is about to close because state government is taxing it to death.
Before I found vapor products, I’d been smoking cigarettes for 32 years. I was so grateful that vape products helped me get away from combustible cigarettes that I wanted to share this alternative. My business let me pursue my passion, provide a valuable service, and make a living doing it.
But in July, the state suddenly imposed a massive 40 percent wholesale tax on my business and more than 300 others like it. Worse, a “floor tax” provision taxes products that we’ve already purchased.
If I have $100,000 worth of inventory in my shop on Oct. 1, I have to cut a check to the state for $40,000. Many small businesses, including mine, simply can’t afford this.
Despite all the talk I hear from Gov. Tom Wolf and lawmakers about job creation, this tax seems designed to do one thing: kill off Pennsylvania’s vape shop industry and the 1,500 full-time jobs it provides. As many as 92 percent of Pennsylvania vape shops are expected to close.
And for what? After being rushed through with little debate, the tax is estimated to generate only $13.3 million – a mere 2 percent of the revenue needed to balance the state budget.
Can you guess how much this tax will raise from a store that shuts down? Not a dime. Both the sales tax that my customers pay and the income tax that I pay will dry up.
Ironically, the state could end up collecting less money with this tax than without it.
Consumers will lose, too. A growing mountain of scientific evidence shows vapor products help smokers improve their health.
In August of last year, Public Health England – an agency within the U.K. government – concluded that vapor products are at least 95 percent less harmful than combustible cigarettes. In April of this year, the Royal College of Physicians released a separate report that reached the same conclusion.
Having your livelihood wiped out by your state government isn’t simply frustrating, it’s morally wrong. Even more disturbing, the state is bankrupting businesses that help people to improve their quality of life.
Lawmakers have an obligation to right this wrong and avoid crushing an entire industry.
State Rep. Jeff Wheeland, R-Williamsport, is proposing legislation that would repeal the 40 percent wholesale tax and replace it with a 5-cents-per-milliliter tax, like what exists in North Carolina and Louisiana. While I do not believe vapor products deserve their own tax on top of sales tax, this plan would at least allow me to keep my business open.
If lawmakers don’t find a solution soon, my business – and hundreds of others – won’t be there to support people trying to quit cigarettes. This unaffordable tax will close my doors for good. It will be an unnatural death at the hands of a horrible public policy.