It’s common sense: When you tax a product, people buy less of it. So, when you heavily tax a potentially life-saving product such as e-cigarettes and vapes, fewer people use it, meaning, sadly, that more people continue to smoke cigarettes and die prematurely as a consequence.
Traditionally, such “sin taxes” are levied on harmful goods such as old-fashioned cigarettes in an effort to discourage their use. But as part of a broader, misguided war on vaping, some states have recently started applying heavy taxes on e-cigarettes, as well. A 2019 study from the National Bureau of Economic Research looked into these taxes and found troubling consequences.
The study examined the state of Minnesota, which imposed a harsh tax on e-cigarettes and vape products at 95 percent the wholesale price. This discouraged people from using vaping products as an alternative to traditional smoking or using them to quit cigarettes. In both cases, these taxes prevented desirable outcomes, because e-cigarettes, while not exactly good for you, are much less harmful than traditional cigarettes, which contain lung-cancer-causing chemicals such as tar. E-cigarettes do not contain tar.
One study found that e-cigarettes are 95 percent less harmful than traditional cigarettes. Yes, there has been widespread panic over isolated instances of vaping-related lung illnesses, but almost all of the deaths reported involved the use of illegal black market substances, meaning legal, nicotine vaping products are not to blame.
Public policymakers should be doing everything they can to encourage people to switch from traditional cigarettes to vaping products. Taxing e-cigarettes heavily has the opposite effect, as basic economic theory predicts and this new study confirms.
The authors conclude that due to the tax, 32,400 adults continued to smoke traditional cigarettes who would have otherwise made the switch to vaping without the tax in place. They continue, “If this tax were imposed on a national level, about 1.8 million smokers would be deterred from quitting in a 10-year period.”
The study doesn’t explicitly say that this means more people will die, but that’s pretty clearly the implication. If more people continue to use traditional cigarettes rather than make the switch to less harmful vaping products, more people will get lung cancer as a result. And lung cancer kills.
Proponents say these taxes are needed to combat the alleged “youth vaping crisis.” But this logic is broken. For one thing, the federal government just raised the age to buy vaping products to 21 nationwide. Whatever issues one may have with such a policy (I raise mine here), it’s at least a more sensible way to reduce teen vaping than to take measures that discourage older smokers from quitting, endangering their health.
And the entire hubbub over teen vaping is a moral panic over much of nothing, anyway. The (legal) products are relatively safe, and it’s far better to have a generation of young people “rebelling” by smoking a mint-flavored Juul than it is to have people chain-smoking cancer-causing cigarettes like so many of our parents did or still do.
The moral of the story here is that consumer taxes have consequences, and those consequences don’t care about regulators’ good intentions. For the thousands of Minnesotans who will likely end up dying from lung cancer as a result of their state’s failed experiment with nanny-state taxation, well, it certainly won’t have been worth the price.