‘DOF just following law on taxing vape products’

Finance Secretary David Atalig said the recent imposition of a 60% import tax on vaping products is simply the agency fulfilling its mandate.

“Since coming on board, it has been my priority to review all regulations under the department and enforce all taxes due to the CNMI. This is one of many changes we are planning to do to enhance our revenues to the CNMI. It’s the law and regulations that are in place and we are enforcing the regulations,” he said.

The levying of the 60% import tax on vape products has caught some clients of VaprSpot owner Louis Rodgers by surprise. The businessman has urged vape users to lobby their representatives on Capitol Hill to amend the statute; he described the 60% import tax as “a bit excessive.”

Atalig is unfazed by the criticism, saying that, despite the lack of official notice on the imposition of the tax, the Division of Customs is just doing its job. “They should know the laws and regulations and being ignorant to it is not an excuse,” he said.

Current regulations, he added, allows Finance—more specifically Customs—to tax all tobacco products and tobacco-substitute products.

“Any vape liquid containing nicotine are subject to tax, pursuant to 4CMC§1402(a)(17), pertaining to non-cigarette tobacco and tobacco substitutes, establishes a 60% tax on tobacco or tobacco substitute or chewable tobacco product, or other smokable or snuffable substance, material or product, other than cigarettes,” said Atalig.

Vape and e-cigarettes fall under this regulation and he said this is why Finance will start imposing this tax for all vape containing nicotine.

Atalig, however, assured that his department will not impose this tax on vape paraphernalia and supplies.

Rodgers also asked that, if the law states that the import tax will be applied on all vape products, then why is Customs levying the tax only on vape liquids.

“Look, I’m a tiny bit glad that Customs is at present only taxing liquids. But if the purpose for exercising the rate increase now is because of ‘enforcement of applicable laws,’ then don’t half step the process and follow federal guidelines fully. The [Food and Drug Administration] has deemed e-cigarette devices, batteries, components, and liquids all as tobacco products,” he said.

“I question the motive if they are only taxing liquids. If they’re [going to] do it, do it right and fully or don’t do it at all,” Rodgers added.

In May of 2016, the FDA deemed all Electronic Nicotine Delivery Systems products as tobacco products because its intended use is to vaporize nicotine or non-nicotine e-liquids.