Bill S6610-2013

Relates to the taxation of electronic cigarette cartridges

Provides for the taxation of electronic cigarette cartridges as tobacco products.

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  • Feb 12, 2014: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Memo

BILL NUMBER:S6610

TITLE OF BILL: An act to amend the tax law and the public health law, in relation to providing for the taxation of electronic cigarette cartridges

PURPOSE: This legislation would include electronic cigarette cartridges as a tobacco product in the tax law, and would subsequently subject them to the appropriate taxes for such items.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subdivision 2 of section 470 of the tax law, as amended by section 15 of part D of chapter 134 of the laws of 2010 by adding two new subdivisions 20 and 21 that add the definition of an electronic cigarette or c-cigarette, as well as electronic cigarette cartridge or e-cigarette cartridge.

Section 2 amends section 1399-aa of the public health law by adding a new subdivision 14, which adds the definition of an electronic cigarette cartridge or e-cigarette cartridge.

Section 3 sets the effective date.

JUSTIFICATION: In recent years we have begun to address the litany of issues that have arrived with the rise in popularity of the electronic cigarette (e-cigarette). Beginning with the ban on sales to minors, they are now banned from being used indoors in the City of New York, and legislation to do the same on a statewide level is being pursued. However, the issue of taxation has yet to be addressed and this legislation will do just that. Currently the Federal Food and Drug Administration (FDA) has yet to rule on how to regulate these products but many states and localities are moving ahead. New York will join Minnesota in classifying the cartridges that contain the nicotine and/or other chemicals that deliver the addictive drug that are found in cigarettes and other forms of tobacco products in a vaporized form.

In December of 2010, the U.S. Court of Appeals for the D.C. Circuit issued a decision stating that e-cigarettes and other products "made or derived from tobacco" should be regulated as tobacco products and that the FDA can regulate them under the Tobacco Control Act. On April 25, 2011 the FDA announced it would not appeal that ruling, and has since been working toward forming a strategy to regulate e-cigarettes under the Tobacco Control Act.

Those in the business of selling e-cigarettes market them as a safe alternative to traditional forms of smoking, i.e. cigarettes, cigarillos and many other smoking related ways of inhaling nicotine. The truth is that to date, the FDA is unaware of what is in the majority of these devices; those they have tested have been found to contain not only nicotine but also detectable levels of known carcinogens and toxic chemicals. The FDA also found that "quality control processes used to manufacture these products are inconsistent or non-existent." Additionally, while they are often marketed as a smoking cessation tool or a safer alternative, there is growing concern amongst tobacco control organizations that there is little noticeable difference in appearance when using these devices. This

could lead to young teens being potentially lured by the e-cigarettes and ultimately find themselves addicted to nicotine, which could very well lead to smoking cigarettes.

Adding these products to Section 470 of the tax law will bring these products in line with other tobacco products; they will be regulated and taxed in the same fashion as other tobacco products. As the State continues to fight to lessen the smoking population as a public health measure, allowing an addictive drug like nicotine to be sold without tax is simply counter intuitive.

PRIOR LEGISLATIVE HISTORY: This is a new bill

FISCAL IMPLICATIONS: The State will receive significant new revenue by classifying these products as tobacco products; they will subsequently be taxed under existing law and new regulations promulgated by the Department of Taxation and Finance as directed under this bill.

EFFECTIVE DATE: This act shall take effect on the 180th day after it shall have become a law; provided, however, that the Department of Taxation and Finance is authorized and directed to promulgate rules and regulations necessary for the implementation of this act on or before such date.


Text

STATE OF NEW YORK ________________________________________________________________________ 6610 IN SENATE February 12, 2014 ___________
Introduced by Sen. RIVERA -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law and the public health law, in relation to providing for the taxation of electronic cigarette cartridges THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 470 of the tax law, as amended by section 15 of part D of chapter 134 of the laws of 2010, is amended and two new subdivisions 20 and 21 are added to read as follows: 2. "Tobacco products." Any cigar, including a little cigar, or tobac- co, other than cigarettes, intended for consumption by smoking, chewing, VAPORIZING or as snuff, AND SHALL INCLUDE E-CIGARETTE CARTRIDGES AND ELECTRONIC CIGARETTE CARTRIDGES. 20. "ELECTRONIC CIGARETTE" OR "E-CIGARETTE." A BATTERY-OPERATED DEVICE THAT CONTAINS CARTRIDGES FILLED WITH A COMBINATION OF NICOTINE, FLAVOR AND/OR CHEMICALS THAT ARE TURNED INTO VAPOR WHICH IS INHALED BY THE USER. 21. "ELECTRONIC CIGARETTE CARTRIDGE" OR "E-CIGARETTE CARTRIDGE." A REPLACEABLE CARTRIDGE THAT CONTAINS NICOTINE OR OTHER CHEMICALS AND IS INTENDED FOR USE WITHIN AN ELECTRONIC CIGARETTE OR E-CIGARETTE. S 2. Section 1399-aa of the public health law is amended by adding a new subdivision 14 to read as follows: 14. "ELECTRONIC CIGARETTE CARTRIDGE" OR "E-CIGARETTE CARTRIDGE" MEANS A REPLACEABLE CARTRIDGE THAT CONTAINS NICOTINE OR OTHER CHEMICALS AND IS INTENDED FOR USE WITHIN AN ELECTRONIC CIGARETTE OR E-CIGARETTE. S 3. This act shall take effect on the one hundred eightieth day after it shall have become a law; provided, however, that the department of taxation and finance is authorized and directed to promulgate rules and regulations necessary for the implementation of this act on or before such date.

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