HARRISBURG, Pa. -- Vape-shop owners in Pennsylvania are holding out hope that lawmakers will revisit a newly passed measure to tax their inventories by 40% as part of the state’s new budget law.
What some have called a “punitive” tax was part of the state’s 2016-2017 budget passed last month, but in August, Rep. Jeff Wheeland (R-Williamsport), proposed a measure that would replace it with a 5-cents-per-milliliter option, similar to policies in North Carolina and Louisiana. Wheeland’s proposal will come up for review this fall when state lawmakers reconvene, according to Watchdog.org.
“Unbeknownst to many, this punitive tax on current inventory has many of Pennsylvania’s 300 vape shops ready to close their doors before the tax takes effect on Oct. 1,” Wheeland said in a memorandum to other congressmen. “If these small businesses do decide to close and lay off workers, not only will the new vape-tax revenues fall short of estimates, but the state may lose significant sales and income-tax revenues.”
Last month, Pennsylvania passed a $2-a-pack tax on tobacco cigarettes, the 10th highest in the nation, Watchdog.org reported. But also part of a $650 million tax increase is the 40% tax on the inventories of vape shops, requiring business owners to pay for products sitting on their shelves.
“If you have $100,000 in inventory, you have to write a check for $40,000,” Josh Sturtz, the manager of Vaporium 814 in Johnstown, Pa., told Watchdog.org. “I don’t know of any company in the area that would be able to do that.”
Also speaking to Watchdog.org, Ken Cala, a co-owner of The Local Vapor in Doylestown, Pa., and his business partners seem to be in better shape than other shops, but he knows some belt-tightening is coming in the next few months. After Oct. 1, store owners will have 90 days to write a check.
“We just have to be very savvy with our ordering right now and make sure anything we do order, we’re pretty damn certain is going to sell before Oct. 1,” Cala said. “At the same time, it doesn’t make sense to, in our opinion, dwindle our inventory down to zero by then because then we’re just going to have to pay the 40% on anything we do order anyway.”
Cala said he is reluctant to pass those costs on to his customers, who are mostly regular patrons he has come to know in the two years his shop has been open.