Vaping tax could deter adults from quitting cigarettes
Taxing electronic cigarettes like regular smokes could result in fewer Americans kicking the habit, some researchers think. A new study published by the National Bureau of Economic Research estimates that taxing vaping products at the same rate as cigarettes could deter 2.7 million U.S. adults from quitting over a decade.
Although there is no federal tax on e-cigarettes, some 17 states and the District of Columbia have a vaping tax, according to The Pew Charitable Trusts. More than half of those states imposed the levy this year amid growing concerns about the safety of e-cigarettes. The taxes come as the vaping industry faces mounting scrutiny for marketing practices that critics say targets younger Americans.
A deadly spate of lung illnesses tied to unregulated vaping products also had the Trump administration recently mulling a ban on flavored e-cigarettes and Congress this month passing a law to raise to 21 the legal age to buy tobacco or vaping gear.
Nearly a decade ago, Minnesota became the first state in the U.S. to tax e-cigs. It initially imposed a rate of 35%, before sharply raising the levy in 2013 to a full 95% of the wholesale price for vaping products. The researchers — economists Dhaval Dave of Bentley University and Daniel Dench, Michael Grossman and Henry Saffer, all of City University of New York — wanted to weigh the impact of these taxes to assess the impact on consumer behavior.
Their main takeaway: In looking at the state's 600,000 adult smokers, Minnesota's e-cigarette tax deterred more than 32,000 adult smokers from giving up regular cigarettes over a 10-year period. That's because the sharp increase in vaping costs in the state made the products more expensive, discouraging consumers.
Not surprisingly, a nationwide vaping tax like the one imposed in Minnesota could have a larger effect. Should federal policy makers opt to tax e-cigs at the same rate as regular cigarettes, the price of the vaping products would rise about 62%, according to the study. That could deter up to 2.7 million smokers from quitting tobacco cigarettes, the researchers conclude.
Roughly 34 million Americans, or around 14% of the adult population, smoke cigarettes. And despite the potential impact of vaping taxes on smoking cessation, other considerations could still justify the added costs, the researchers said.
"The public health benefits of not taxing e-cigarettes, however, must be weighed against effects of this decision on efforts to reduce vaping by youth," they cautioned.