‘Now or never’: Red Bay council approves 10-cent vape tax ahead of deadline

(We appreciate the Red Bay News and publisher Jason Collum for allowing republication of this article.) 

RED BAY | City officials joined municipalities across the state in rushing to meet a deadline to establish a new 10-cents-per-milliliter tax on vape products on Wednesday, Oct. 1. The new ordinance will allow Red Bay to collect the full allowable 10-cent tax on vape products instead of being limited to just a small percentage of what the State of Alabama will collect when its law goes into effect on October 1, 2026.

“It’s either now or never; today’s the day,” Mayor Charlene Fancher told council members on whether they adopted the ordinance, noting the state’s deadline.

The City of Red Bay’s ordinance text was based on the text of the ordinance written by the City of Lincoln, Ala. The ordinance calls for a 10-cent per milliliter of consumable vapor product sold inside the city limits, and a five-cent per milliliter tax on the same sold outside the city limits, but within the police jurisdiction. Other cities around the state approving similar ordinances by the October 1 deadline include Muscle Shoals, Decatur, Tuscaloosa, Montgomery and Mobile, among others. Many more were expected to act on and adopt their own ordinances by the deadline last week.

According to a story by AL.com, there is some confusion around the state on whether ordinances like that approved by the City of Red Bay will amount to double taxation. The law seems fairly clear, at least in a notice published by the Alabama Department of Revenue, in that the municipal tax and the state tax, while being for the same item and stacking on top of each other, will not mean cities or counties collect twice. The concept is the same as sales taxes, wherein municipalities collect sales taxes on top of what those collected by the state.

Municipalities in Alabama were allowed to enact their own tax if approved by the deadline last week. Those that did not already have a tax in place or approve one by October 1 will be barred from enacting their own ordinances in the future but will still receive a small percentage – 2.5 percent – of the 10-cent levy the state will collect, allocated according to city or county population. The notice from ALDOR states municipalities or counties with their own tax ordinance will not be allowed to receive a distribution from the state’s tax.

The new vape tax is an excise tax, meaning it is collected over and above sales taxes.