20% sin tax proposed for vape products to raise more funds for Guam hospital
By Pacific Island Times News Staff
Sen. Joe San Agustin has proposed a bill to levy a 20 percent excise tax on e-cigarettes and related vape products, which would be implemented on a staggered basis.
Bill 193-37 would establish an Electronic Nicotine Delivery Systems or ENDS excise tax and require licenses for ENDS businesses, which are estimated to generate close to a million in new revenues for the government.
"This proposed tax on ENDS products came after realizing the loss of millions in revenues in the Healthy Futures Fund where it showed major shortfalls in revenues from tobacco taxes," San Agustin said.
He said studies showed that several smokers have switched from regular cigarettes to ENDS products.
"We wanted to ensure we captured an industry that has been providing an alternative to traditional smoking by distributing nicotine in vape, e-cigarettes or other electronic methods and were using tobacco licenses but not being taxed the tobacco tax because they were not tobacco retailers, but a new non-taxed industry,” San Agustin said.
The resulting new revenues would be used to build revolving funds for the Department of Revenue and Taxation, which would get 40 percent, and the Guam Memorial Hospital, 60 percent.
Bill 193 would impose a 10 percent tax on all ENDS products for the first year of enactment. The tax rate would increase to 20 percent effective the second year.
The tax would be imposed at the point of sale, to be made visible as a line item on the receipt. If enacted into law, the bill is estimated to raise $800,000 in new revenues for DRT and GMH in the first year and the potential to double in the second year.
“For years, businesses that engage in the retail of ENDS products also known as vape or e-cigarettes, have been operating utilizing licenses under the tobacco retail category," San Agustin said.
Sen. Telo T. Taitague, a cosponsor of Bill 193-37, said she met with key industry stakeholders to collaborate on the legislation.
“The evidence is clear: Vaping is just as harmful and addictive as cigarettes. There is a growing vaping problem among our young people and high school students that will no doubt affect their health and the services they will seek at our struggling hospital," Taitgaue said.
"This sin tax and the related fines and fees established in this measure will help fund operations at our hospital as well as our Youth Tobacco Education and Prevention efforts,” she added.
Taitague acknowledged that tax proposals typically form a sore topic.
"We already are taxing most tobacco products. This measure just ensures that we are taxing all nicotine products and applying this sin tax across the board," she said.
Sens. Roy Quinata and Dwayne San Nicolas are also cosponsors of the bill.