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Differential Taxes for Differential Risks — Toward Reduced Harm from Nicotine-Yielding Products
In the face of a rapidly evolving nicotine-product marketplace, policymakers could consider differentially taxing these products to maximize incentives for tobacco users to switch from the most harmful products to the least harmful ones.
Vaping Taxes: Bad Fiscal Policy is also Bad Health Policy
The current federal tax on a 30 ml bottle of e-liquid is $7. By doubling this tax with a provincial equivalent (on a product that sells pre-tax for between $15 and $20) the ultimate price will be between 90 and 120 percent higher: A $14 excise levy on a $20 product plus sales tax of 13 percent results in a price of $38.42, making for a 92-percent tax rate. That becomes 118 percent if the price is $15. Such tax rates will have very unfortunate effects: Fewer people will switch from cigarettes and dual users will be less inclined to use non-combustibles. As a result, more will ultimately die prematurely.
STRIKING THE RIGHT BALANCE: VAPING AND E-CIGARETTE REGULATION IN CANADA
Canada’s regulatory approach to vaping and e-cigarettes must balance the benefits of vaping as a tool to stop smoking with the risk posed to youths who take up the habit, says a new conference report from the C.D. Howe Institute.
Vaping Tax Reprise
To determine an appropriate excise rate, a good starting point is to consider the levy imposed upon combustible cigarettes. That levy is currently about $9 per pack (20 sticks with a federal rate just under 15 cents and provincial rates that vary between 20 cents and 30 cents per stick). Using the risk-based levy of 5 percent of the $9 for e-liquid that delivers the same amount of nicotine would yield a tax rate of 45 cents. Such a low rate is unlikely to satisfy health advocates, so consider a rate of 90 cents instead, with one third going to the federal government and two thirds to provincial governments.
The Vilification of Vaping
Harm reduction is the keystone. To this end, and to ensure that the downward trend in cigarette sales continues, policymakers need to enact measures that will simultaneously limit access to teens and induce smokers to switch to vaping products.
Excise Taxes on Vaping Products: A Grey Forecast
The failure to set reasonable tax levels in this market arises because governments have not cooperated adequately; they have not been guided by the principle of risk-proportionate taxation; they have not been guided by research that points to substitutability; and, for whatever reason, have not been informed by lessons from the well-established decades-long illicit combustible cigarette trade.
Young adult responses to taxes on cigarettes and electronic nicotine delivery systems
In the United States, higher ENDS tax rates are associated with decreased ENDS use but increased cigarette smoking among 18- to 25-year-olds, with associations reversed for cigarette taxes. In an attempt to curb the use of increasingly popular electronic nicotine delivery systems, such as e-cigarettes, 30 U.S. states and Washington, D.C. have implemented taxes on these products. But a growing body of evidence suggests that, among adults, these taxes can increase cigarette smoking, a habit whose health effects are likely to be more harmful than vaping nicotine according to the National Academy of Science and Medicine.
Costs of vaping: evidence from ITC Four Country Smoking and Vaping Survey
NVP prices were generally higher than prices of combustible cigarettes, especially the high upfront NVP devices. The high upfront costs of purchasing a reusable NVP may discourage some smokers from switching to vaping. However, the average lower costs of cartridges and e-liquids relative to a package of cigarettes make switching to a NVP an attractive alternative to smoking in the long term so long as smokers switch completely to vaping.
Do Tobacco Companies Have an Incentive to Promote “Harm Reduction” Products?: The Role of Competition
Although cigarette companies will back alternatives to combusted tobacco when threatened by competition, the prospects for their lasting conversion to NCNDPs will depend on the extent of such competition, which will be influenced by government regulation of tobacco products. The regulation of non-combustible nicotine delivery products and cigarettes should be proportionate to their relative risks, so that smokers have incentives to switch from combustibles to safer alternatives, and cigarette companies have incentives to promote safer products.
Intended and Unintended Effects of E-cigarette Taxes on Youth Tobacco Use
Over the past decade, rising youth use of e-cigarettes and other electronic nicotine delivery systems (ENDS) has contributed to aggressive regulation by state and local governments. Between 2010 and mid-2019, ten states and two large counties adopted ENDS taxes. We use two large national surveys (Monitoring the Future and the Youth Risk Behavior Surveillance System) to estimate the impact of ENDS taxes on youth tobacco use. We find that ENDS taxes reduce youth ENDS consumption, with estimated ENDS tax elasticities of -0.06 to -0.21. However, we estimate sizable positive cigarette cross-tax effects, suggesting economic substitution between cigarettes and ENDS for youth. These substitution effects are particularly large for frequent cigarette smoking. We conclude that the unintended effects of ENDS taxation may considerably undercut or even outweigh any public health gains.