Raising Taxes on e-Cigarettes Increases Cigarette Sales, New Research Shows
Increasing taxes on e-cigarettes in an attempt to cut vaping may cause people to purchase more traditional cigarettes according to a new study funded by the National Institutes of Health.
For every 10 percent increase in e-cigarette prices, e-cigarette sales drop 26 percent while traditional cigarette sales jump by 11 percent.
The research team, economists from six universities including Georgia State University’s Andrew Young School of Policy Studies, looked at Nielson Retail Scanner data from 35,000 retailers nationally across the years 2011 to 2017. Their study was published by the National Bureau of Economic Research this week.
“vaping-related illnesses are a public health concern. However, cigarettes continue to kill nearly 480,000 Americans each year, and several research reviews support the conclusion that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults,” said co-author Erik Nesson of Ball State University. “Thus, balancing e-cigarette and cigarette use will continue to be an important issue for policymakers.”
Twenty states had an e-cigarette tax as of January 2020, significantly raising the price of e-cigarettes. Additionally, Congress is considering enacting a federal tax on e-cigarettes. The United States House Ways and Means Committee approved an e-cigarette tax with bipartisan support in October, 2019, that set a national e-cigarette tax proportional to the Federal cigarette tax.
The prospect of a national tax concerns study co-author Michael F. Pesko from Georgia State University.
“We estimate that for every 1 e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” he said. “The public health impact of e-cigarette taxes in this case is likely negative.”
