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Research & Commentary: Vaping Taxes Do Not Deter Youth Use of E-Cigarettes

April 4, 2019

State Government Relations Manager Lindsey Stroud examines the effects of Pennsylvania's 40 percent wholesale tax on youth e-cigarette use, finding youth use increased in the year following the tax.

Lawmakers in dozens of states are attempting to curb youth e-cigarette use by introducing excise taxes on vaping products. Typically, these include wholesale taxes determined by price and per-milliliter taxes based on product volume. Some of the proposals introduced would tax e-cigarettes that do not contain nicotine.

The use of electronic cigarettes by young people needs to be addressed. However, taxes are an ineffective measure for deterring youth e-cigarette use. Moreover, excise taxes are typically used by lawmakers to discourage the use of dangerous products and should not be applied to tobacco harm reduction products. E-cigarettes have helped millions of U.S. adults quit smoking, so their use should be encouraged and promoted, not taxed.

A recent example of the devastating impact a draconian tax can have on e-cigarettes and vaping occurred in Pennsylvania. In 2016, the General Assembly passed a 40 percent wholesale floor tax on e-cigarettes. Within a year, an estimated 120 vape shops closed in the commonwealth.

Several lawmakers in other states are proposing similar measures under the mistaken belief that increasing the cost of e-cigarettes will deter youth use, despite the fact data from Pennsylvania indicate its e-cigarette tax has not reduced youth use. In fact, vaping among high school students increased after the wholesale tax went into effect.

According to the 2015 Pennsylvania Youth Survey (PAYS), 15.5 percent of middle and high schoolers in Pennsylvania reported use of e-cigarettes within the past 30 days or that they had used an e-cigarette at least once in the 30 days prior to the survey. For 10th and 12th graders, 20.4 percent and 27 percent, respectively, reported using a vaping device within a 30-day period prior to the survey. These numbers are considerably higher than the data provided by the national Monitoring the Future Survey, which shows among 10th and 12th graders, 14.4 percent and 16.2 percent, respectively, reported using e-cigarettes in the past 30 days.

In 2017, PAYS found e-cigarette use had increased; 16.3 percent of middle and high school students said they had used e-cigarettes in the past 30 days. Notably, vaping rates increased to 21.9 percent and 29.3 percent of 10th and 12th graders, respectively. These are significantly higher than the available national figures, which show among 10th and 12th graders, 13.1 percent and 16.6 percent, respectively, reported using e-cigarettes and vaping devices in the past 30 days.

More notably, nicotine consumption increased. In 2015, PAYS found that of “past-year vape users,” 71.4 percent reported using only flavoring and “19.1 percent … [said they] had used nicotine.” However, PAYS noted in 2017, 67.3 percent of e-cigarette users reported vaping using only flavoring, while 29.4 percent reported vaping with nicotine.

More data are necessary, but by all indications, youth are not deterred by e-cigarette taxes. It’s important for lawmakers to note minors typically rely on others to obtain tobacco products and e-cigarettes. The U.S. Food and Drug Administration found 86 percent of youths aged “15 to 17 years old obtained [tobacco] cigarettes by asking someone else,” and 89 percent said they relied on these sources for their e-cigarettes. These so-called “social sources” include siblings, friends, parents, and even strangers.

Lawmakers should avoid taxing tobacco harm reduction products, including e-cigarettes and vaping devices. Current data show these taxes do not reduce youth e-cigarette use. Therefore, lawmakers should not place excise taxes on products that are significantly less harmful than cigarettes and have helped millions of smokers quit.

The following documents provide more information on tobacco harm reduction and sin taxes.

Vaping, E-Cigarettes, and Public Policy Toward Alternatives to Smoking
https://www.heartland.org/publications-resources/publications/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.

Research & Commentary: Vaping Taxes and Bans Hurt Smokers Trying to Quit
https://www.heartland.org/publications-resources/publications/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: Despite Scientific Evidence, More Americans Believe E-Cigarettes Are as Harmful as Tobacco Cigarettes
https://www.heartland.org/publications-resources/publications/research--commentary-despite-scientific-evidence-more-americans-believe-e-cigarettes-are-as-harmful-as-tobacco-cigarettes
In this Research & Commentary, Lindsey Stroud, a state government relations director at The Heartland Institute, discusses a 2019 study that found the number of Americans who believe e-cigarettes are just as harmful as tobacco cigarettes has increased. Stroud says state legislation that regulates, taxes, and even prohibits e-cigarettes have helped to fuel Americans’ misperceptions and urge lawmakers to move forward with legislation that promotes the use of e-cigarettes as an important tobacco harm reduction tool.

E-Cigarette Primer for State and Local Lawmakers
http://heartland.org/policy-documents/e-cigarette-primer-state-and-local-lawmakers
Joel Nitzkin provides evidence e-cigarettes work as a tobacco harm reduction modality and reviews the arguments against them. He closes with recommendations for actions state and local lawmakers should and should not consider regarding tobacco harm reduction and e-cigarettes.

Poor Smokers, Poor Quitters, and Cigarette Tax Regressivity
http://www.budgetandtax-news.org/article/19564
Dr. Dahlia Remler of the Department of Health Policy and Management at Columbia University demonstrates cigarette taxes are regressive, burdening poor individuals more than other groups.

Research & Commentary: Electronic Cigarettes
http://heartland.org/policy-documents/research-commentary-electronic-cigarettes 
Heartland Institute Senior Policy Analyst Matthew Glans examines electronic cigarettes, tobacco harm reduction, and various proposals to regulate e-cigarette use. E-cigarettes have become one of the most popular nicotine replacement products and a key building block in tobacco harm reduction strategies.

Nicotine without smoke: Tobacco harm reduction
https://www.heartland.org/policy-documents/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
https://www.heartland.org/policy-documents/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 Lindsey Stroud, Heartland’s state government relations manager, at lstroud@heartland.org or 757/354-8170.