Texas Senate Bill SB2308

Texas 2023 - 88th Regular

• Filed: 3/10/23

Caption

Relating to taxes on e-cigarettes and alternative nicotine products; imposing taxes; imposing reporting and recordkeeping requirements.

Impact

The introduction of SB2308 would have considerable implications for state laws concerning taxation and regulation of nicotine products. It aims to provide the state with the authority to monitor sales and establish a centralized tax system for e-cigarettes and alternative nicotine products. The regulations include requirements for recordkeeping and reporting on sales and distributions, embedding a framework for fiscal accountability within the emerging market of non-combustible nicotine delivery systems. It is anticipated that this will lead to increased compliance costs for businesses operating in this sector, which may be passed on to consumers through higher prices.

Summary

SB2308 proposes the imposition of taxes on e-cigarettes and alternative nicotine products, establishing a regulatory framework for these items within the state of Texas. The bill is structured to impose specific tax rates that vary based on the type of product, including a tax of 5 cents per e-cigarette pod and 5% of the wholesale price for e-cigarettes that do not use pods. Additionally, a tax of $1.23 per ounce is applied to alternative nicotine products. The intent of these taxes is to generate revenue while ensuring adherence to regulations concerning the sale and distribution of these products.

Sentiment

Reactions to SB2308 appear to be mixed within the legislative context. Proponents argue that the regulation and tax on e-cigarettes and alternative nicotine products will promote public health by potentially reducing consumption and allowing the state to generate necessary revenue. Opponents, however, express concern about the implications of increased taxation on consumers and the regulation of emerging market products, fearing it could stifle innovation and negatively impact small businesses trying to compete.

Contention

Notable points of contention surrounding SB2308 include debates over the appropriateness of the tax rates set forth and concerns regarding the potential burden it places on retailers and consumers. Critics of the tax argue that excessive taxation might lead to a reduction in sales, inadvertently pushing consumers towards unregulated or black market products. Moreover, there is apprehension about the compliance aspect, specifically regarding the financial implications of recordkeeping and reporting requirements for businesses. This bill highlights a growing tension between regulation for public health and the economic impacts on the workforce involved in the retail of such products.

Texas Constitutional Statutes Affected

Health And Safety Code

• Chapter 147. E-cigarette Retailer Permits
  • Section: New Section