Taxation leads to higher smoking rates

The CVA does not believe in taxing harm reduction products. Taxing a harm reduction product is counter productive, as it discourages improvements to public health and increases sales of tobacco products, our nations leading cause of death.

Minnesota conducted a study, “The impact of E-cig taxes on smoking rates: Evidence from Minnesota,” which found that taxing vaping products would lead to an 8.1% increase in tobacco use and a smoking cessation decrease of 1.4%. It also found that if vapour products had not been taxed an additional 32,400 adults would have quit smoking.

The study by the National Bureau of Economic Research found that “while cigarette taxes reduce cigarette use and e-cigarette taxes reduce e-cigarette use, they also have important interactions on each other”, said Michael Pesko, a health economist and assistant professor at Georgia State University, in a 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, sales of the vaping product dropped 26 percent.

The higher tax on e-cigarettes resulted in an 11 percent increase in sales of traditional cigarettes, the researchers concluded in a study released last month.

“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,” Pekso said. “The public health impact of e-cigarette taxes in this case is likely negative.”

While the CVA does not support taxing vapour products, it is sometimes an unfortunate reality. Taxation must be sensible and equitable across the vapour industry. British Columbia is an example of reasonable taxation. In January, British Columbia introduced at 20% tax on all vapour products. While the CVA doesn’t agree with taxing the most effective harm reduction method, the tax is proportionate to the entire industry. Nova Scotia in comparison introduced a per millilitre tax which disproportionately effects low nicotine products. As a result, high nicotine pods will only increase $1.50 per pack, as where low nicotine vapour products will increase an average of $30 per bottle. Nova Scotia significantly advantaged Big Tobacco owned brands and unintentionally pushed Nova Scotian’s towards higher nicotine concentrations.