Mainlining Tobacco Income

Posted 12th July 2019 by Dave Cross
The US State of Maine is hiking the cost of vaping by 43% to “protect the children”. Its addiction to tobacco income is leading it to tax harm reduction - and studies demonstrate that when this happens fewer people quit smoking and fewer people continue to vape.

Democrat Joyce McCreight proposed the Maine legislation “to fund tobacco cessation and make sure tobacco products are taxed at the same rate”. That she thinks vaping is a “tobacco product” highlights the crisis of thinking taking place.

Vaping is to be “equalized” with the current tax rate applied to actual tobacco products, which means electronic cigarettes are nonsensically treated in the same manner as pipe tobacco and cigars. The law will ringfence $7 million for tobacco prevention and cessation programs,” which represent a fraction of their projected increased tax revenue coming.

Will this benefit the residents of Maine? Unlikely.

In 2017, Georgia State University’s Michael Pesko wrote a paper with Dalhousie’s Casey Warman titled: “The Effect of Prices on Youth Cigarette and E-Cigarette Use: Economic Substitutes or Complements?”

They concluded: “Only Minnesota had an e-cigarette excise tax during our study period. Between the second half of 2015 through the end of 2016, six other states adopted e-cigarette taxes. Policymakers passing e-cigarette taxes may believe that they are protecting the well-being of youth, but our results provide reason to be cautious with this assumption. Our results suggest that while e-cigarette taxes will reduce youth use of e-cigarettes (both ever use and current use), youth that smoke will smoke more. A $1 increase in e-cigarette cartridge prices, for example, increases teenage cigarette use among smokers and non-smokers combined by 4.5 extra cigarettes per month.”

So, vape taxes are bad for teens – what about adults?

This month, Michael Pesko revisited the subject with Charles Courtemanche and Johanna Maclean for the National Bureau of Economic Research.

They concluded: “Our research contributes further evidence … that regulating e-cigarettes have the unintended consequence of raising traditional cigarette use; while neither product is harmless, the clinical literature strongly suggests that e-cigarettes are the less harmful product. With few exceptions (Abouk and Adams 2017, Cotti, Nesson, and Tefft 2018), this finding has been documented for youth (Dave, Feng, and Pesko 2019, Pesko, Hughes, and Faisal 2016, Pesko and Currie 2019, Friedman 2015), pregnant women (Cooper and Pesko 2017, Pesko and Currie 2019), and now for the first time adults. These results suggest caution in regulating e-cigarettes because they may increase smoking of traditional cigarettes.”

Catherine Maclean said: “Short story: taxes appear to matter!”

“Harm reduction offered by e-cigarettes to smokers may be very important - 68% of smokers want to quit but cannot as quitting is very hard. We find that a $1 rise in the traditional cigarette tax decreases any smoking and daily smoking by up to 5%, and increases any and daily vaping by up to 9% to 13%.”

Maclean pointed out that their findings show any increase in tax on vape products decreases vaping by up to 10% - plus, it reduces the efficiency of taxes on actual tobacco, “dissuading quitting”.

Maine might be helping some people with their vape tax, but they won’t be children or adult vapers or smokers. So who is benefiting?

Resources:

  • “The Effect of Prices on Youth Cigarette and E-Cigarette Use: Economic Substitutes or Complements? by Pesko and Warman, 2017 – [link]
  • “The Effects of Traditional Cigarette and E-Cigarette Taxes on Adult Tobacco Product Use” by Pesko, Courtemanche and Maclean, 2019 – [link]


 Dave Cross
Article by Dave Cross
Freelance writer, physicist, karateka, dog walker