The Omaha City Council passed the city’s first tax on vaping products Tuesday and, with a barely discussed amendment, made permanent the city’s broader occupation tax on tobacco.
The council approved the city’s own tobacco tax in 2012 as a way to support construction of the new cancer center at the University of Nebraska Medical Center.
Then-councilwoman Jean Stothert, who was running for mayor, expressed reservations about the new tax. It passed with a sunset clause that would kill the tax at the end of 2022.
On Tuesday, as the vaping tax neared approval, Council President Chris Jerram and Councilman Ben Gray made a motion to strike the sunset language from the wider tobacco tax ordinance.
Gray said he had talked about making the change to boost the city’s bottom line for months, and Jerram defended the change as better reflecting the public health nature of the tax. “Unfortunately, smoking and vaping are not going away,” Jerram said.
But council members Aimee Melton and Brinker Harding said they couldn’t support such a change without discussing what it would do, whether the changes should be made and why.
“When they passed it there was a sunset in it, and they’re gonna change it in 30 seconds,” Melton said, criticizing the process by which it was passed.
Said Harding: “There was no mention of it before the vote.”
Even City Treasurer Donna Waller expressed surprise about the change, saying she would need more time to figure out what the council had done and where the money would go.
She said later that any funds above the $35 million to be paid over 10 years to UNMC’s Buffett Cancer Center would go to the city’s general fund.
The city estimates the vaping tax could raise up to $1 million a year.
Stothert said after the vote that she supports the change to make the tax permanent, but she wants to earmark additional funds from the tax for street and road maintenance. She also said she supports expanding the tax to cover vaping so that vapers are treated the same way the tax treats smokers and so fewer people might vape.
“As a matter of fairness and health and safety, I support taking the sunset away,” she said. “If we can use it for roads, I would be in support of that.”
Jerram said the mayor would have to make a decision based on what the council passed, a change that contains no restrictions on how the money would be spent.
He said he prefers setting aside some of the money for public health research. He said he’d like to see tax receipts for six months after the change before deciding what to do with the funds.
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Stothert’s leverage on this issue could be limited. The council needs only five votes to override a potential veto. The measure passed 5-2. It goes into effect 15 days after it becomes law.
Under Tuesday’s other major change to the tax — expanding it to cover vaping products — vaping will get 3% more expensive in Omaha.
Public health advocates, council supporters and Stothert have said such a vaping tax could help some young people choose not to start.
Local vaping retailers warned that passing the tax would drive more vaping purchases online and beyond the city limits, threatening sales tax collections.