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  • NJ A1832
  • Imposes a wholesale sales tax on electronic cigarettes and similar nicotine delivery products, changes tax base and requires licenses to conduct business in tobacco products.
Introduced
(1/27/2016)
In Committee
(1/27/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill imposes the New Jersey Tobacco Products Wholesale Sales and Use Tax on electronic cigarettes. Electronic cigarettes and similar tobacco-substitute smoking devices are designed to deliver a nicotine-based or other substance-based vapor and are often manufactured to resemble cigarettes, cigars and pipes. Under this bill, the wholesale sales tax rate for these unregulated products and their components is imposed at a rate of 75% to impose a tax burden in line with a similar tax burden imposed upon cigarettes under the cigarette tax act. The bill also reestablishes the wholesaler's price charged by the wholesaler upon their sale of any tobacco product to a retail dealer as the base upon which the tax is determined. This was the tax base imposed under the tax first enacted in 1990 but was changed in 2002 to the manufacturer's wholesale price, which has complicated the calculation, collection and enforcement of the tax as the sale by a manufacturer to a wholesaler does not trigger the wholesaler's tax liability. The bill also requires licensing by the Division of Taxation of businesses of a manufacturer, distributor, wholesaler or retailer of tobacco products under the New Jersey Tobacco Products Wholesale Sales and Use Tax Act. Currently, a tax license is not required for conducting sales of tobacco products such as cigars, chewing tobacco, pipe tobacco, moist snuff, etc. The license will be in addition to the certificate of authority to collect the tax and will allow the Director of the Division of Taxation the ability to conduct the same review of the background and qualifications of such businesses as under the cigarette tax act. The director will have the authority to issue the license and make rules and regulations concerning the same and impose licensing fees. Eighty percent of the State revenue from the $50 annual licensing fees collected from retailer dealers will be credited to the special projects and development fund in the Department of Health to provide grants to local health agencies for local enforcement efforts concerning the sale and commercial distribution of tobacco products to persons under the age of 19 years. Data released by the Centers for Disease Control and Prevention (CDC) indicate that the use of electronic smoking devices has increased nationwide and, during 2011-2012, doubled among middle and high school students. The CDC data further indicate that use of electronic smoking devices has been associated with increased use of conventional tobacco products and may serve as an "entry point" to use of conventional tobacco products by minors, particularly as the cartridges used in the devices, which are often made with flavors such as fruit, mint, or chocolate, may be attractive to minors. While New Jersey became the first state to ban the use of electronic smoking devices in public places and workplaces, and to ban sale of the devices to minors, comparable State tax treatment is necessary to avoid an unintended tax preference that is gaining the attention of the tobacco industry that has turned to marketing these products to younger "smokers of legal age." The health and safety implications of using electronic smoking devices are not known. However, limited studies conducted by the CDC and FDA found potential health concerns and quality control issues with the devices: harmful substances were found in some products, including irritants, genotoxins, and animal carcinogens; nicotine was found in products labeled as containing no nicotine; and large variations were found in the quantity of nicotine delivered in each puff. The bill exempts from the tax any product that is approved by the United State Food and Drug Administration for tobacco cessation, nicotine cessation, or other therapeutic purpose if that product is marketed and sold solely for that approved purpose.
Health and Senior Services
Introduced, Referred to Assembly Health and Senior Services Committee  (on 1/27/2016)
 
 

Date Chamber Action Description
1/27/2016 A Introduced, Referred to Assembly Health and Senior Services Committee
Date Motion Yea Nay Other
None specified