HB 304-ELECTRNC TAX RETURNS;TOBACCO & E-CIGS TAX  CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 304, "An Act requiring the electronic submission of a tax return or report with the Department of Revenue; relating to the taxes on cigarettes and tobacco products; taxing electronic smoking products; adding a definition of 'electronic smoking product'; and providing for an effective date." 4:46:40 PM CHAIR OLSON reopened public testimony on HB 304. 4:47:30 PM STEPHANIE CHILTON, Owner, High Voltage Vapes, urged members not to support HB 304 because it would cripple her business. Her husband previously worked in the oil field and her home and livelihood depends on the success of her business to support her family of five. She has closed one shop and laid off four employees already. The bill will cause the state to lose income from the taxes that businesses are currently paying because customers will shop online instead of supporting local businesses. 4:48:49 PM TRISTAN TALIESIN informed the committee he began vaping seven months ago and successfully quit smoking tobacco products after twenty-eight years. The bill would force him to buy products online and if the local shop raises its prices he will not shop locally. He votes and lives in Alaska and served in the military. Mr. Taliesin stressed that e-cigarettes and vaping are a consumer-driven market as an alternative to smoking tobacco products; laws may cause him to spend his money out of state or overseas. 4:50:35 PM SETH PARKER said vaping saved his life when he started in January 2015. The bill would hurt local businesses and destroy the vaper industry in Alaska, and will force him as a consumer to take his money out-of-state, even if he prefers to buy locally. 4:51:59 PM JORDAN EDWARDS said he has lived in Alaska for 30 years. He said he smoked for ten years and quit five years ago by using vaper products. He urged the committee to consider the impact of HB 304 on small shops, local consumers, and the public in Alaska. He opined that vaping is not smoking as stated in a recent legal case. If a 100 percent wholesale tax takes effect, shops will not be able to compete and all of the shops in the Matanuska-Susitna area will close. Mr. Edwards warned that all vapers will return to smoking or will purchase products online, and the first line of defense against underage vaping will be stopped. Currently, shops ask for identification, and kids will turn to online purchases by the use of prepaid credit cards. All consumers will turn to Internet purchases, resulting in lost jobs, lost taxes, lost in-state commerce and revenue, and the state will suffer far greater than if a realistic tax were chosen. He concluded, saying that during the next decade one billion people will die worldwide from tobacco-related illnesses if vaping products are demonized. 4:54:00 PM ELIZABETH RIPLEY, Executive Director, Mat-Su Health Foundation, informed the committee her organization's board of directors strongly supports HB 304 for the following reasons: increased tobacco taxes reduce youth and adult smoking rates; the proposed tax includes e-cigarette products, which are currently outside of Alaska's laws and tax structures. Higher taxes prevent youth tobacco use and reduce health care costs; for example, in 2005, a tax of $1 per pack in the Matanuska-Susitna (Mat-Su) Borough and an additional $1 per pack state tax were effective and decreased smoking 58 percent for Mat-Su middle schoolers, 8 percent for traditional high schoolers, 22 percent for alternative high schoolers, and 35 percent for adults. Ms. Ripley said these decreases were a health and economic win for affected individuals, their families, and for communities. The foundation also supports the bill because it includes e- cigarette products, which are perceived by adolescents to be safer than traditional cigarettes. She said e-cigarettes are a "grooming tool," which allows kids to become addicted to tobacco and nicotine using flavors such as bubble gum and Skittles. A report in 2015 showed that ninth graders who use e-cigarettes were three times more likely to switch to combustible tobacco products [report not provided]. She urged the committee to pass HB 304 in order to protect all of Alaska's children and to improve the health of the Alaska population. REPRESENTATIVE JOSEPHSON asked Ms. Ripley to provide the committee with the abovementioned report. 4:57:06 PM ALISON HALPIN stated her opposition to HB 304. Ms. Halpin said she is an [e-liquid] manufacturer, a vape shop manager, and a consumer who would be affected by the proposed tax. Firstly, she would be taxed for manufacturing [e-liquids] for sale; secondly, her retail location would be taxed; and finally, she would have to pay a higher price for products. The tax would decimate an industry which helps people stop smoking, as she was able to with a personalized vaporizer, and she has helped others quit smoking. The tax would push customers to online retailers. Ms. Halpin said vape shops are the first line of defense against underage vaping. Demographics indicate the people who smoke are individuals who suffer from depression and mental illness, are low-income, and are in high-stress environments; the bill would remove vaping as an option for those who want to stop. 4:58:47 PM ERIC VARGASON said he opposes the tax because shops will close and force people to shop online, and consumers will not receive instruction on battery safety and support for quitting smoking. Most importantly, vape shops check identification and shun people under the age of 19 away from vaping. The tax will put people out of work, close shops, and remove the opportunity for people to quit smoking. 5:00:32 PM ANGELA CARROLL said she was speaking on behalf of members of the Smoke-Free Alternatives Trade Association. If HB 304 becomes law, the bill would tax vape products at 100 percent of wholesale price and treat alternative products just like cigarettes. According to the Department of Revenue, small operations would be required to carry tobacco licenses issued by the state as if they were selling tobacco products, which they are not. She said categorizing vape products into a tobacco tax scheme is the wrong approach. Ms. Carroll described the paperwork required by the bill, and she urged the committee to review the forms. The remainder of her testimony will be submitted in written form. 5:02:53 PM JAMES BRIGGS said he owns an e-liquid company called Peche Foggin Sauce. Mr. Briggs expressed his opposition to HB 304 because the proposed wholesale tax will hurt him as a consumer and drive him out of business. The tax will close local businesses and drive consumers to online sales. E-liquid contains "pg, vg," artificial and natural flavorings, and sometimes nicotine. The ingredients vary in price from $30 per gallon to $200 per gallon, and nicotine costs $300 per gallon. The tax will double his costs and the price of his product, so consumers will turn to online vendors, ultimately hurting state taxes. Also, some will return to combustible cigarettes which contain 4,000 chemicals and known carcinogens. Mr. Briggs urged the committee to oppose the tax. 5:04:34 PM CHAIR OLSON closed public testimony. [HB 304 was held over.]