Research & Commentary: New Hampshire Should Avoid Draconian Taxes on E-Cigarettes and Vaping Devices
Proposals in the Granite State would apply a 65 percent tax to e-cigarettes and vaping devices.
Legislation in New Hampshire aims to curb the use of e-cigarettes and vaping products. If passed, Senate Bill 2 and House Bill 680 would subject all vaping devices, even those that do not contain nicotine, to a 65 percent tax.
Proponents of the legislation believe it will help deter youth from using e-cigarette products. However, data reveal regulations on e-cigarettes increase youth combustible cigarette use. After initiating a task force to combat youth e-cigarette sales, Lancaster County, Nebraska reported sales of vaping products to minors decreased “from 21.2 percent in 2017 to 5.3 percent in 2018.” Meanwhile, sales of non-vaping tobacco products increased during the same period, from 5.9 to 8.7 percent. A 2015 study reached similar conclusions, finding bans on the sales of e-cigarettes to youth increased smoking rates by “1.0 percentage point.”
Unfortunately, draconian taxes on tobacco harm reduction products negate the public health gains e-cigarettes provide, have adverse effects on youth combustible cigarette consumption, and threaten state and local economies.
Despite calls for their ban, electronic cigarettes have emerged as an effective cessation tool. Approximately three million American adults have used e-cigarettes to quit smoking. A 2019 study found e-cigarettes are twice as effective as nicotine replacement therapy in helping smokers quit.
Moreover, several of the public health groups that first linked tobacco cigarettes to cancer have found e-cigarettes are significantly less harmful than combustible tobacco cigarettes. The Royal College of Physicians estimates the use of electronic cigarettes is “unlikely to exceed 5% of the harm [caused by] smoking.”
Not only should lawmakers refrain from taxing and overregulating tobacco harm reduction products because they offer public health benefits, but also because they have the potential to save billions of dollars in smoking-related health care costs. A State Budget Solutions study found that if all current smoking Medicaid recipients had switched from tobacco cigarettes to e-cigarettes, states’ Medicaid savings could have amounted to $48 billion in 2012.
A similar analysis by The R Street Institute found that if just 1 percent of Medicaid enrollees were to switch from combustible tobacco cigarettes to vaping devices, Medicaid savings “will be approximately $2.8 billion per 1 percent of enrollees” over the next 25 years.
Aside from being a useful harm reduction product, e-cigarettes and vaping devices have been an economic boon for local and state economies. A 2015 analysis estimated “U.S. brick-and-mortar vape shops generate annual non-online sales of more than $300,000 per store.” The industry is also expected to grow substantially over the next few years. In fact, the global electronic cigarette market “is estimated to reach $44,610.6 million by 2023.”
As the Granite State currently dedicates very little funding to tobacco education and prevention efforts, it makes little sense for lawmakers to tax a product that helps smokers quit. In 2018, New Hampshire “received $261.3 million tobacco settlement payments and taxes,” yet spent only $140,000, less than 5 percent of funds, on prevention and cessation efforts.
E-cigarettes are a robust tobacco harm reduction tool that can provide substantial health care cost savings and deliver revenues to local and state economies. Rather than imposing high and unnecessary taxes on e-cigarettes and vaping devices that hurt smokers looking to quit, lawmakers should focus on combating youth cigarette use.
The following documents provide additional research on e-cigarettes and tobacco harm reduction.
Vaping, E-Cigarettes, and Public Policy Toward Alternatives to Smoking
For decades, lawmakers and regulators have used taxes, bans, and burdensome regulations as part of their attempt to reduce the negative health effects of smoking. Recently, some have sought to extend those policies to electronic cigarettes. This booklet from The Heartland Institute urges policymakers to re-think that tax-and-regulate strategy. Policymakers should be mindful of the extensive research that supports tobacco harm reduction and understand bans, excessive regulations, and high taxes on e-cigarettes often encourage smokers to continue using more-harmful traditional cigarette products.
Podcast Series: Voices of Vapers
In this weekly podcast series, State Government Relations Manager Lindsey Stroud talks with researchers, advocates, and policymakers about tobacco harm reduction and electronic cigarettes. The series provides important information about the thousands of entrepreneurs who have started small businesses thanks to THRs and the millions of adults that have used electronic cigarettes and vaping devices to quit smoking tobacco cigarettes.
Research & Commentary: Vaping Taxes and Bans Hurt Smokers Trying to Quit
In this Research & Commentary, Heartland Institute Senior Policy Analyst Matthew Glans and State Government Relations Manager Lindsey Stroud examine vaping bans and taxes and consider how such measures block or limit what is for many smokers an effective method for halting the use of tobacco cigarettes.
Research & Commentary: Randomized Trial Finds E-Cigarettes Are More Effective Smoking Cessation Tool Than Nicotine Replacement Therapy
Lindsey Stroud, a State Government Relations Manager at The Heartland Institute examines a study in The New England Journal of Medicine that finds e-cigarettes and vaping devices to be twice as effective as nicotine replacement therapy (NRT) in helping smokers quit cigarettes. Nearly 700 participants were studied over a 52-week period, with researchers finding that 18 percent of e-cigarette users reported abstinence, compared to 9 percent of those using NRT. Stroud writes that “these latest findings provide more valuable information on the public health role that e-cigarettes and vaping devices provide for the 38 million cigarette smokers in the United States,” an implores policymakers to regulate these devices in a way that promotes their usage.
Nicotine without smoke: Tobacco harm reduction
This report aims to provide a fresh update on the use of harm reduction in tobacco smoking, in relation to all non-tobacco nicotine products but particularly e-cigarettes. It concludes that, for all the potential risks involved, harm reduction has huge potential to prevent death and disability from tobacco use, and to hasten our progress to a tobacco-free society.
Research & Commentary: New CDC Report Finds Vaping Helps Smokers Quit
A report released by the Centers for Disease Control and Prevention (CDC) found only 0.4 percent of the people who had never smoked tobacco in a CDC study group are current vapers, which the report defines as using a vaping device either every day or some days. The CDC report, the first of its kind, estimates e-cigarette use among U.S. adults using a nationally representative household survey. The report finds only 3.4 percent of adults who have never smoked have tried an e-cigarette; 12.6 percent of Americans have tried an e-cigarette; and fewer than 4 percent of the U.S. population are regular e-cigarette users.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, our Consumer Freedom Lounge, and PolicyBot, Heartland’s free online research database.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Lennie Jarratt, a state government relations manager at The Heartland Institute, at email@example.com or 312/377-4000.