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Michigan – Stop a Vapor Tax!

current status

Bill
Introduced

Passed
Senate

Passed
House

Signed by
Governor

06/24/21 – Introduced, Referred to Committee on Regulatory Reform.

A raft of legislation that failed to pass in 2020 is being brought back in the Michigan Senate for a third bite at the apple.

Senate Bills 572 through 577 would impose new taxes, marketing restrictions,and raise the state’s minimum sales age for tobacco products to 21. While a few of these bills contain commonsense provisions (like ID requirements for online sales and discounted penalties for retailers who train their staff how to check ID), the tax on safer nicotine products is a dealbreaker.

If enacted, SB 572 would impose the following new taxes on low-risk nicotine products:

  • Open-system vapor products (bottled e-liquid): 18% wholesale tax
  • Closed-system vapor products (pre filled pods, cigalikes, etc.): 60c/mL
  • Alternative Nicotine Products (like nicotine pouches): 50c/oz

The Michigan Senate is not back in regular session until September, at which time this package of bills is expected to move with urgency.

  • Share your experience with switching to vapor products. If affordability compared to continuing to smoke was a motivating factor for trying vaping or other smoke-free products, be sure to include that in your comments. Conversely, if the already high initial cost of these products delayed your initial purchase, highlight this instead. Be sure to include any changes in your health that you’ve experienced as a result of switching to safer nicotine or tobacco products.
  • Taxes on traditional cigarettes are intended to discourage use. But, e-cigarettes and other smoke-free tobacco products are estimated to be 98 – 99% less harmful than smoking, discouraging use is counter to the goals of reducing smoking rates.
  • Other governments are taking exactly the opposite approach. Public Health England (the government public health agency) recently explicitly endorsed a policy of encouraging people who smoke to switch to e-cigarettes and vapor products.
  • Sin taxes are regressive. People who smoke and those who switch to vaping and other smoke-free alternatives are disproportionately poor and low income people. Sin taxes place unnecessary burdens on an already financially challenged group. To make matters worse, people in the low-income bracket are less likely to be insured and lack access to health care providers. The affordable resources available to these people have low success rates.
  • Imposing a tax on these products will drive consumers to shop in neighboring states that do not have a similar tax. At the same time, consumers will be encouraged to shop online for better deals, sending even more money out of the community. Local businesses will not be able to compete, be forced to close their doors, and jobs will be lost. This is bad for the city/state and will result in less revenue, not more.
  • Note that vapor products are already subject to a general sales tax.
  • Taxing smoke-free tobacco and nicotine products in a manner similar to how combustible tobacco products are taxed sends a confusing and inaccurate message to would-be adopters that these two very different products present similar risks. The result of this message is that more people, those that otherwise would have switched to a smoke-free product, will be encouraged to continue smoking.

Read Full Bill Text - SB 572

Read Full Bill Text - SB 573

Read Full Bill Text - SB 574

Read Full Bill Text - SB 575

Read Full Bill Text - SB 576

Read Full Bill Text - SB 577

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