Vape shop owner hopes proposed tax reform can save industry

LEMOYNE, Pa. (WHTM) — A state lawmaker’s proposal to repeal and replace a burdensome tax on the e-cigarette industry has the support of a local shop owner.

Dennis Brogan is co-owner of both Gettysburg Vapes and Cloud Jammer vape shops in Lemoyne. He says small businesses like his are being forced to close under the current 40 percent wholesale tax imposed by the state last year.

“That hits us up front,” Brogan said. “Something that cost $1,000 normally is actually now $1,400 for the same inventory that I’ve got to bring in. It’s ridiculous.”

The current state tax is wide reaching and, according to Brogan, industry killing. Not only are the e-liquids used in vapor pipes subject to the tax, but so are the pipes themselves, batteries and any other accessories. Vape shop owners like Brogan worked to avoid a retroactive 40 percent tax also imposed on existing inventory.

“We just tried to get rid of everything – sell, sell, sell – special after special to move it out,” Brogan said. “We wanted as little on the shelves as possible for them to tax, so we could see what we could really afford to bring in.”

The result has been a smaller variety of liquid flavors and vaping equipment on the shelves. Brogan says as an established business of several years, he was able to persuade certain vendors to sell products at a reduced price, absorbing some of the added cost of the wholesale tax.

“Without that, we wouldn’t have been able to stay in business,” he said. “We’re lucky we had that relationship because other shops did not.”

Brogan applauds a bill newly introduced by state Sen. Camera Bartolotta (R-46), which would replace the wholesale tax with a five-cent per milliliter retail tax on e-liquid only. According to Bartolotta, more than 100 Pennsylvania vape shops have closed since the tax took effect in October.

“As more shop owners continue to go out of business as a result of this tax, it becomes even less likely that the state will collect the amount of revenues projected for the current year’s budget,” Bartolotta said. “It is critical to revisit this issue and plot a better way forward that promotes growth in the industry.”

Bartolotta says she opposed imposing the wholesale tax and warned other legislators that it would lead to shop closings and job losses. She says she has learned a lot about the vape industry by speaking with a family member who owns an online vape business in Florida.

“Is it a health food? I mean, is it a healthy habit?” Bartolotta said. “No, but it’s far healthier than traditional tobacco products.”

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