Thursday, September 2, 2021

Memo to Legislators: Raising E-Cigarette Taxes Strengthens Cigarette Sales


Nine economists from seven American universities have just published an analysis of the “Intended and Unintended Effects of E-cigarette Taxes on Youth Tobacco Use.”  Here is a key paragraph from their work:

As of March 2021, 30 US states had adopted an ENDS [electronic nicotine delivery systems] tax, often as a means to reduce youth vaping. However, if reducing ENDS accessibility increases combustible tobacco use, as suggested by this study and prior work, these taxes could prove harmful to public health. That is, given current evidence suggesting smoking is substantially more dangerous than using ENDS, the health costs from greater youth smoking as a result of ENDS taxes may outweigh benefits from reduced youth ENDS use, though an exact calculation is beyond the scope of this research.” (emphasis added)

Using several years of data from two large national surveys, these investigators found that while higher e-cigarette taxes reduce e-cigarette use, “we estimate sizable positive cigarette cross-tax elasticities, suggesting economic substitution between cigarettes and e-cigarettes for youth. These substitution effects are particularly large for frequent cigarette smoking. We conclude that the unintended effects of ENDS taxation may more than fully offset any public health gains.”

Note that the economists stated that “this study and prior work” suggest that reducing smokers’ access to e-cigarettes increases smoking. This statement is supported by nine previous studies, linked here: Pesko et al., 2020, Saffer et al., 2020, Pesko and Warman, 2021, Abouk et al., 2020, Cotti et al., 2021, Friedman 2015, Dave et al., 2019, Pesko et al., 2016, Pesko and Currie, 2019.  

State and federal legislators, please note: RAISING TAXES ON E-CIGARETTES WILL LEAD MORE PEOPLE, INCLUDING TEENS, TO SMOKE CIGARETTES. E-cigarettes are substitutes for their combustible cousins, so anything you do to deny access to e-cigarettes will promote cigarette sales.  Four years ago that was the rationale for keeping e-cigarette taxes low in my tobacco tax proposal, which was supported by sixteen prominent tobacco research and policy experts across the U.S. (here)

Despite the clear-cut dangers, anti-tobacco groups like Campaign for Tobacco-Free Kids will continue to pressure policymakers to raise taxes on e-cigarettes in hopes of countering a grossly exaggerated teen vaping epidemic (here and here). Their battle cry ignores the reality that teen smoking has been nearly eliminated (here).




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