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).

 

 

 

Kentucky’s New E-Cigarette Tax Will Keep Smokers Smoking, and Dying

Under cover of the Covid-19 epidemic, Kentucky lawmakers earlier this year passed an excise tax on cigarettes’ principal competitors: e-cigarettes and vapor products (here).  The tax goes into effect August 1, and amounts to $1.50 on cartridge products and 15% on other vapor products.  That’s significant, as a cartridge equals about a pack of cigarettes, which is taxed by the Commonwealth at $1.10 per pack. 

Tobacco prohibitionists are thrilled.  Dr. Ben Chandler, president of the Foundation for a Healthy Kentucky: “This new tax is clearly a win for health in Kentucky, especially for our adolescents and teens, because it will result in a significant price increase that will deter many of our youth from using dangerous e-cigarette products.” (here ) 

Chandler has crusaded for e-cigarette taxes since 2018, when he said that “youth e-cig use is often a gateway to cigarette smoking makes immediate action imperative.”

Wrong.  Current (past-30-day) smoking among Kentucky high schoolers was 26% in 2005 and 24% in 2011, before e-cigarettes were widely available.  In contrast, during the e-cigarette era (2011 to 2017), current smoking dropped from 24% to 14% (here). 

Chandler actually has the facts backwards.  Research co-authored by a University of Kentucky economist two weeks ago concluded that “e-cigarette taxes increase traditional cigarette use” and “this finding has been documented for youth.” (abstract here).  The reason is simple: e-cigarettes and vapor products are effective substitutes for combustible cigarettes. 

Kentucky’s new tax on e-cigarettes guarantees that more Kentuckians will smoke… and die.