Juneau, Alaska (Alaska Beacon) - The Alaska Senate on Tuesday passed a bill that would impose the state’s first-ever tax on electronic cigarette products.
Sen. Jesse Kiehl, D-Juneau, spoke during floor debate in favor of the measure, Senate Bill 89, on behalf of its sponsor, Senate President Gary Stevens, R-Kodiak.
“It is an important public-health measure, Mr. President,” Kiehl said, addressing Stevens. “This bill is not a revenue raiser. This is about reducing the rapidly growing addiction of young people, especially our high schoolers, to nicotine. We’re already at one in four, Mr. President. We need to take these steps.”
Kiehl was referring to data from the 2022 Alaska Tobacco Facts Update, released in December by the state Department of Health, showing that as of 2019, 26% of Alaska high school students used e-cigarette products.
The bill would impose a 25% tax at the retail level on e-cigarette products, including liquids and delivery devices. Raising the price through the tax would discourage youth use, Kiehl said. “Once someone is addicted, they tend not to be terribly sensitive to price. But young people who are not yet addicted are,” he said.
Alaska’s tobacco tax has not changed since 2006, a time before use of e-cigarettes, also known as vaping, became common. The current state tax does not include any provisions for e-cigarette products, though several municipalities impose their own local taxes on those products.
So far, Senate Bill 89 is the only tax bill to reach either floor of the Legislature in the 2023 session.
The bill also raises the state’s minimum legal age for the purchase of e-cigarette products to 21, matching the federal minimum age as specified in a bill known as Tobacco 21, or T21, that was signed by President Donald Trump in 2019. And it includes some new safety requirements for shipments of vaping liquids
The tax would bring in over $3.2 million in the first year, an amount that would increase slightly in later years, according to the Alaska Department of Revenue. Most of that money would go into tobacco cessation and prevention funding, as is already the case with existing tobacco tax revenues.
The bill passed by a 14-6 vote on Tuesday. If the House does not pass it before Wednesday’s adjournment of the current legislative session, the measure could be considered in next year’s session.
A similar Stevens-sponsored bill passed the Legislature last year by wide margins in both the Senate and House, but Gov. Mike Dunleavy vetoed it last September. At the time, the Republican governor said he objected to the new tax that the bill would impose.
Two of the opponents of both this year’s version and last year’s version, Sen. Mike Shower, R-Wasilla, and Sen. Shelley Hughes, R-Palmer, expressed their own objections to the idea of a new tax. They spoke during floor debate Monday, when amendments were considered, and on Tuesday, just before the vote.
“I’m not ready to start adding taxes until the fiscal plan components start moving through this body,” Hughes said during Tuesday’s floor session.
She and Shower raised some other objections, including concerns that members of the military who are younger than 21 would be denied the full rights of adulthood.
Stevens and other bill proponents have argued that e-cigarette companies are targeting youth with advertisement and product design, including candylike and fruity flavors in vaping liquids.