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Tobacco state may tax e-cigs lightly

The House of Representatives of North Carolina, a state whose economy has long been dominated by tobacco interests, may vote to impose only a token exise tax on electronic cigarettes. They have passed a preliminary version of a tax bill, which will be passed on to the State Senate if the House passes the final version in a few days. The bill also makes changes in certain taxes on other businesses.

Voting proceeded along party lines, with Republicans favoring the measure, which they saw as a pro-tobacco move. Democrats opposed the bill by and large, consistent with the anti-smoking position often associated with the more reform-minded party. The vote count was 83 in favor, 35 opposed.

If the bill is enacted, electronic cigarettes will be charged five cents per millileter of e-liquid used, a small amount compared to the 45 cents per pack charged for combustible cigarettes.

Representative Becky Carney, a Democrat from the district of Mecklenburg, North Carolina, pleaded with her colleagues to pull the e-cig provisions of the bill and consider them separately, in a stand-alone bill.

"This is a huge step we're about to take in North Carolina, and I do think that it merits debate as a standalone bill," said Carney. She argued that under the law's provisions, the state will lose money as smokers switch to e-cigarettes.

"What about those revenues in North Carolina that we potentially will lose and this could bring in?" she asked, and also noted that it would be good to wait until the FDA regulations are finalized, a point of view echoed by Representative Rick Glazier, a Democrat from Cumberland. Glazier pushed through an amendment that will allow the bill to conform to whatever the FDA finally rules.

Republicans countered that the state should begin to collect some type of tax on e-cigarettes that goes beyond a simple sales tax. The rate can be raised later if necessary, they argued. "This is a place to start," said Representative Larry Pittman, a Republican from Cabarrus, "and I think it’s good enough."

Representative Julia Howard, a Republican from Davie, noted that the state is slated to gain 300 new jobs from a forthcoming expansion of the e-cigarette industry.

"There's some danger here, but there's a lot more danger in not doing anything," said Representative Jim Fulghum, Republican from Wake.