Background: The Council of the District of Columbia introduced an excise tax on electronic cigarettes effective 1 October 2015 through the Vapor Product Amendment Act of 2015 (“the Act”). The Act amended Title 47 Taxation, Licensing, Permits, Assessments, and Fees of the D.C. Official Code by adding vapor products to the list of “other tobacco products” subject to the tobacco excise tax (p. 194).
According to paragraph 9(A) of § 47-2401 Definitions Title 47 Chapter 24 Tobacco Tax of the District of Columbia Official Code a “vapor product” means:
(A) Any non-lighting, noncombustible product that employs a mechanical heating element, battery, or electronic circuit, regardless of shape or size, that can be used to produce aerosol from nicotine in a solution; or
(B) Any vapor cartridge or other container of nicotine in a solution or other form that is intended to be used with or in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device.
Rate of the tax: The rate of the excise tax on other tobacco products, including vapor products, is determined according to § 47-2402.01 [Tax on other tobacco products] which states:
The tax rate for other tobacco products shall be equal to the excise tax and surtax under § 47-2402(a)(1)-(2) on a pack of 20 cigarettes, expressed as a percentage of the average wholesale price of a package of 20 cigarettes. Prices and taxes used for the calculation are those in effect as of March 31 preceding the September 1 announcement.
Effective 1 October 2018, the tax levied on cigarettes rose from $2.50 to $4.50 per pack of 20 units. A surtax of $0.44 is also applied. Under the District’s Code, the increase triggered an automatic rise in the tax on vapor products to 96% of the wholesale price.