NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3514
SPONSOR: Dinowitz 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 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-ci-
garette). 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 addic-
tive 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 chem-
icals. The FDA also found that "quality control processes used to manu-
facture 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 organiza-
tions 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:
2019-20- A.3503 - Referred to Ways and Means/S.876 - Referred to Inves-
tigations and Government Operations
2017-18- A.1139 - Referred to Ways and Means/S.1089 - Referred to Inves-
tigations and Government Operations
2015-16- A.296 - Referred to Ways and Means/S.722 - Referred to Investi-
gations and Government Operations
2013-14 - A. 8594 - Held for Consideration in Ways and Means/S.6610
Referred to Investigations and Government Operations
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 Taxa-
tion 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.
