PALMER -- The Matanuska-Susitna Borough's new tax on increasingly popular electronic cigarettes still stands, to objections from e-cig smokers and sellers, and praise from anti-smoking groups.
The borough Assembly two weeks ago passed a new tax on "vape" shops -- three operate in the Mat-Su, providing much of the Valley's e-cigarettes, merchants say -- by tacking on new language to an existing tobacco tax, mostly intended to keep young customers from starting the smoking habit.
The devices hold liquid (which may contain nicotine) that's vaporized and inhaled but produces vapor instead of smoke.
Retailers say the poorly worded Mat-Su tax ordinance change means they now have to pay 55 percent of the wholesale value of anything sold in their stores, including cotton or battery chargers, while trying to sell a product that may help people quit tobacco.
Proponents of the tax, including local and state health advocacy groups, say e-cigarettes lure young people at high rates with sweet flavors and may come with significant health risks.
Borough Mayor Larry DeVilbiss vetoed the e-cigarette tax last week, saying the title of the tax ordinance didn't give merchants enough warning about the sweeping changes to come. DeVilbiss said he wasn't necessarily opposed to the tax, but felt "due process" wasn't served.
The Assembly rejected his reasoning at a meeting Tuesday night with a 5-2 vote to override the veto. At least five votes are necessary.
Assembly members Steve Colligan and Ron Arvin suggested letting the veto stand to allow time to fix problems with the e-cigarette tax, which even sponsor Jim Sykes conceded included things like vaporizers that could be excluded and still deter young users.
But that idea found little traction with the rest of the body.
"I was particularly moved by the testimony I heard tonight from many of the people coming here tonight that have the stories, very credible," said Willow's Vern Halter. "But really I think this tax probably should go forward."
Before the veto override, scores of retailers testified to their diligence in asking for ID from young people to make sure they're not selling to people under 19.
Many vapers provided emotionally intense testimony about how e-cigarettes helped them kick the tobacco habit.
Aja Collins said she was a tobacco smoker for 16 years. She credited vaping with helping her quit because it gave her the "ritualized habit of hand to mouth" that was part of her addiction as well as nicotine.
"Being able to quit smoking with the help of a vaporizing unit has saved my life," Collins said.
Another e-cig proponent pointed out that he dropped from 36 milligrams of nicotine a day with tobacco to 3 a day with vaping.
Proponents of the tax gave similarly emotional descriptions of the health risks of nicotine addiction -- in any form.
Taxation is one of the most proven strategies for reducing youth tobacco use, several health advocates said. The worry is that kids will start smoking e-cigs but then move to conventional tobacco, Mat-Su Health Foundation executive director Elizabeth Ripley said.
Most tobacco use starts before the age of 18, Ripley said. In the Mat-Su, a foundation study showed, youth smoking dropped more than 19 percent from 2005 to 2011, which she linked to borough taxes.
A Centers for Disease Control study showed e-cig use among teens exceeds cigarette use and use among high-school students increased from 4 percent to 13 percent in a year, Ripley said.
"It behooves the companies that make, sell and distribute e-cigarettes to hook the next generation of smokers while they're young and e-cigs are outside the law and (Food and Drug Administration) regulations right now," she said.
K.T. McKee, Mat-Su manager for the American Lung Association, criticized the youth marketing by manufacturers, using the example of a cartoon character named "Mr. Cool" used by Blu e-cigarettes.
"The Burchell High School principal has a drawer full of confiscated vape pens," said McKee.
A paucity of long-term research into the potential health effects of e-cigs makes policy decisions tricky. There's little data on the long-term effects of vaping, and while they can help some smokers quit cigarettes, it's unclear whether "safer means safe," according to a Boston University study.
The Mat-Su taxes anything with nicotine and the devices used to vaporize it at 55 percent rate of the wholesale price, Sykes said Wednesday in an email. He said cotton balls, batteries, wire and other items don't fall in that category.
Local merchants say they are already at a disadvantage when it comes to Internet sales, and the tax will increase their cost difference. They also say customers will just drive to Eagle River or Anchorage.
Sykes, in his email, said the Assembly will likely look for ways to level the playing field, "but that's probably longer-term."
It wasn't clear Wednesday just how the new tax would actually be implemented.
A frustrated David Glenn, co-owner of Fatboy Vapors in Wasilla, said the borough ordinance doesn't really set up a way to calculate or assess the new tax. Fatboy also operates stores in California, Oregon and Washington, as well as Anchorage and Fairbanks.
Glenn also expressed concern about comments made by the borough attorney Tuesday night that the tax would need to apply back two weeks, when the ordinance was originally adopted.
Glenn said Tuesday's vote has consequences for the thousands of Valley residents who vape.
"We're kind of reeling from this right now," he said by phone Wednesday. "We feel that the Assembly failed to look at the evidence in any sensible manner whatsoever."
He and owners of the other vape shops in the Mat-Su said they hope to work with the Assembly on a better way to regulate their products that limits the taxation to the liquid nicotine products only. Glenn said the only products in his store with nicotine are the glass e-liquid bottles, and only 70 percent of those have nicotine in them.
Tax supporters say the limited regulation on e-cigarettes makes it impossible to know exactly what's in the products sold.
Sykes said Wednesday he'd be open to taxing only nicotine juice and removing vaporizers, or coming up with a separate excise tax, but that would take longer than tweaking the existing regulations.
"What interest would the borough have to threaten these businesses?" he wrote in the email. "None. They can contribute to better public health and provide some revenue to do that. So I think it can be sorted out reasonably, and I expect to be working on it."
The Mat-Su has the ninth-highest combined local-state tobacco tax in the country, according to data from the Campaign for Tobacco-Free Kids. The borough levies a $2.28 per-pack tax on cigarettes in addition to Alaska's $2 per-pack tax.
Anchorage's cigarette tax is the seventh highest in the nation.