Lawmakers are really going to have to walk a tight line between taxing vapes and cigarettes

February 19, 2020

in the future as raising taxes on eLiquids, e-cigarettes, and vape products in general actually increases cigarette sales.  This means we'll know pretty much right out the gate where your policymaker interests are as they'll have to choose between public health and bolstering government piggy banks. 

According to a new study funded by the National Institutes of Health, increasing taxes on vaping in an attempt to cut vaping causes people to go right back and purchase more traditional combustible cigarettes. 

The study published by the National Bureau of Economic Research, was done by a research team consisting of economists from six universities including Georgia State University’s Andrew Young School of Policy Studies.  What this research team did was look at Nielson Retail Scanner data from 35,000 retailers nationally across the years 2011 to 2017. 

The research has so far found that for every 10 percent increase in vaping prices from taxation, e-cigarette sales drop 26 percent while traditional cigarette sales jump back up by 11 percent.

“Vaping-related illnesses are a public health concern. However, cigarettes continue to kill nearly 480,000 Americans each year, and several research reviews support the conclusion that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults,” said co-author Erik Nesson of Ball State University. “balancing e-cigarette and cigarette use will continue to be an important issue for policymakers.” he added. 

Twenty states had an e-cigarette tax as of January 2020, significantly raising the price of e-cigarettes. Additionally, Congress is considering enacting a federal tax on e-cigarettes. The United States House Ways and Means Committee approved an e-cigarette tax with bipartisan support in October, 2019, that set a national e-cigarette tax proportional to the Federal cigarette tax.

The prospect of a national tax concerns study co-author Michael F. Pesko from Georgia State University. “We estimate that for every 1 e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” he said, adding; “The public health impact of e-cigarette taxes in this case is likely negative.”

If you're looking for more details about this study it is called; “The Effects of E-Cigarette Taxes on E-Cigarette Prices and Consumption: Evidence from Retail Panel Data.” Chad D. Cotti from the University of Wisconsin Oshkosh, Charles J. Courtemanche at the University of Kentucky, Johanna Catherine Maclean at Temple University, Nesson, Pesko and Nathan Tefft at Bates College, all share lead authorship for the study. 

What do you think about these results?  Is it going to be that cut and dry that lawmakers and policymakers are going to have to be considerate enough to find that fine balance or will we just see more of the same as we saw with cigarettes in the 90's with the master settlement agreement?  Will vaping get any favors in the form of less tax on the sheer fact it is safer and a successful way to quit smoking?

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