The Canadian Vaping Association examines the consequences of taxing vaping
The Canadian Vaping Association (CVA) continues to be a vocal adversary for vape taxation, cautioning all governments that taxing a harm reduction product is counter productive, as it discourages improvements to public health and increases sales of tobacco products. As various regions throughout Canada and the United States continue to introduce vape specific taxation, this outcome is continuously replicated.
There is a significant amount of available data, which all shows conclusively that taxing vaping products serves only to increase tobacco product use. One such study conducted by Minnesota, “The impact of E-cig taxes on smoking rates: Evidence from Minnesota,” found that taxing vaping products led to an 8.1% increase in tobacco use and a smoking cessation decrease of 1.4%. It concluded that if vapour products had not been taxed, an additional 32,400 adults would have quit smoking.
Another study by the National Bureau of Economic Research found, “while cigarette taxes reduce cigarette use and e-cigarette taxes reduce e-cigarette use, they also have important interactions on each other.” Michael Pesko, a health economist and assistant professor at Georgia State University, said in a related statement, “E-cigarettes and cigarettes are economic substitutes. So, if you raise taxes on one product, you will increase use of the other.”
Pesko and other researchers drew upon sales data from 35,000 retailers across the nation for a seven-year period and concluded that for every 10 percent increase in e-cigarette prices, vaping product sales dropped 26 percent. At the same time, the researchers concluded that the higher tax on e-cigarettes resulted in an 11 percent increase in sales of traditional cigarettes. “We estimate that for every one e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” said Pesko. “The public health impact of e-cigarette taxes in this case is likely negative.”
“Regulators have stated that one of the objectives of the additional tax is to deter youth through increased costs. While well intended, the policy fails to recognize that taxation will disproportionately affect the open vapour industry, while only slightly increasing costs for closed pod systems, which data shows are preferred by youth. While the higher cost may act as a deterrent for youth, it will have the same effect on adult smokers. Discouraging youth vaping needs to be a multi-faceted approach which does not need to include taxation. The CVA has recommended a series of policies to protect youth, such as limiting the sale of flavoured and high nicotine products to age-restricted specialty vape stores, ID verification software and a ban on advertising in any place youth are present. In combination, these solutions will be far more effective than the band aid solution of taxation and prohibition.” said Darryl Tempest, Executive Director of the CVA.
Through taxation, governments drive vapers back to smoking, thus slowing or reversing the decline in smoking rates. These policies encourage a flood of illicit and potentially dangerous products. In states with excessive taxation or restrictive regulation, most consumers report being able to easily acquire products from the black-market. Yale researchers found that the EVALI outbreak was largely isolated to areas with cannabis prohibition and regulated products were not associated with the outbreak.
Regulators have stated that deterring youth is the primary goal of the tax, however it is likely that a secondary purpose of the tax is to off set the declining tobacco tax revenues, since smokers transitioning to vaping will have inevitably decreased them. In Canada, it has been calculated that these lost revenues will be more than offset by the reduced burden on our publicly funded health care system. Harm reduction products must be taxed as such. Reasonably, the solution to tobacco harm must be taxed at a lower rate than tobacco. Vaping has been repeatedly proven to be the most successful harm reduction product globally, and governments must reflect this in their taxation policies in order to achieve the goal of a smoke-free future.