ENDS Taxes: Difference between revisions

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*Currently, Congress is considering doubling the cigarette excise tax (to $2.01 per pack) and setting the ENDS tax to parity with the new cigarette tax (Durbin 2021). This tax, if adopted, would imply a roughly $2.01 tax per 0.7 fluid mL of nicotine, assuming a Juul pod is equivalent to a pack of cigarettes (Truth Initiative 2019), or $2.87 per fluid mL. Our MTF results suggest that this would reduce youth current ENDS use by 5.5 pp but raise current cigarette use by 3.7 pp, assuming that the cigarette tax portion of the bill has no effect as suggested by the small, statistically insignificant cigarette tax effects estimated in this paper, and other recent studies (Hansen, Sabia, and Rees 2017). The YRBSS results meanwhile suggest much larger reductions in youth current ENDS use, but a sizable increase in youth current cigarette use of 2.3 pp. If ENDS are substantially safer products as suggested by several major government-commissioned reviews (McNeill et al. 2018; National Academies of Sciences, Engineering, and Medicine 2018; UK Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment 2020), our results suggest that the proposed bill may harm youth health in the United States

*[https://www.nber.org/system/files/working_papers/w29216/w29216.pdf PDF Version]

* These findings support tobacco taxation as a robust tool for suppressing purchasing and suggest that differential taxation in proportion to product risk would be an effective way to incentivize smokers to switch from smoked to unsmoked products.

*Citation: Freitas-Lemos, R.; Keith, D.R.; Tegge, A.N.; Stein, J.S.; Cummings, K.M.; Bickel, W.K. Estimating the Impact of Tobacco Parity and Harm Reduction Tax Proposals Using the Experimental Tobacco Marketplace. Int. J. Environ. Res. Public Health 2021, 18, 7835. doi:10.3390/ijerph18157835

*Cigarettes continue to kill nearly 480,000 Americans each year, and several reviews support the conclusion that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults than cigarettes. Our results suggest that e-cigarettes are elastic goods and their use substantially reduces cigarette sales.

*Despite potentially detrimental unintended consequences of e-cigarette taxes, between the end of our study period (December 2017) and December 2020, 20 additional states enacted e-cigarette taxes, bringing the total to 28.  

*We simulate that for every one standard e-cigarette pod (a device that contains liquid nicotine in e-cigarettes) of 0.7 ml no longer purchased as a result of an e-cigarette tax, the same tax increases traditional cigarettes purchased by 6.2 extra packs.  

*[https://www.nber.org/system/files/working_papers/w26724/w26724.pdf PDF Version]

*Much evidence suggests e-cigarettes are substantially less harmful than combustible cigarettes. E-Cigarette Availability (ECA) involves making e-cigarettes available to allow smokers to switch to them, and informing smokers of the lower risks of e-cigarettes vis-à-vis smoking.  

*First, ECA is supported by a public health ethics framework. ECA is a population-level intervention consistent with respecting individual autonomy by using the least restrictive means to accomplish public health goals, and it supports equity and justice. Second, ECA is supported by four principles that form a biomedical ethics framework. By reducing smokers' health risks and not harming them, ECA fulfills principles of beneficence and non-maleficence. Because ECA allows smokers to make informed health decisions for themselves, it fulfills the principle requiring respect for persons and their autonomy.

*Toxicological testing, population studies, clinical trials and randomized controlled trials demonstrate the potential reductions in exposures for smokers. Many barriers impede the implementation of product substitution in tobacco harm reduction. These products have been subjected to regulatory bans and heavy taxation and are rejected by smokers and society based on misperceptions about nicotine, sensational media headlines and unsubstantiated fears of youth addiction. These barriers will need to be addressed if tobacco harm reduction is to make the maximum impact on the smoking endemic.

*Increasing taxes on reduced-risk products could function to deter smokers from switching to them.

*We provide some of the first evidence on how e-cigarette taxes impact adult smokers, exploiting the large tax increase in Minnesota. That state was the first to impose a tax on e-cigarettes by extending the definition of tobacco products to include e-cigarettes. This tax, which is 95% of the wholesale price, provides a plausibly exogenous deterrent to e-cigarette use.

*Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period. The taxation of e-cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period.  

*We show that e-cigarette taxes increase pre-pregnancy smoking, increase prenatal smoking, and lower smoking cessation during pregnancy. These findings imply that e-cigarettes and traditional cigarettes are substitutes among pregnant women.

* [https://www.nber.org/system/files/working_papers/w26126/revisions/w26126.rev0.pdf PDF Version]

*We find evidence that adults are more likely to use e-cigarettes when traditional cigarette taxes rise.

*Traditional cigarette taxes appear to be less effective – in terms of reducing smoking – when a locality has also adopted an e-cigarette tax.  

*The vapor industry is a dynamic part of the U.S. economy, accounting for about $24.46 billion in output or about 0.14 percent of GDP. It employs approximately 166,007 Americans who earned wages and benefits of about $7.90 billion.

*Members of the industry and their employees paid $3.31 billion in federal, state and local taxes. This does not include state and local sales taxes or excise taxes that may apply for specific retail purchases which are estimated to total $1.67 billion.

*The fact that the poor smoke more than the rich means that they either will be paying more in taxes or will be “forced” to cut back more. Higher cigarette taxes cause hardship among some poor individuals who find it difficult to quit. In the drive for better public health, we should acknowledge the price paid. Standard principles for assessing the equity of taxes should not be forgotten.

*50 state and Washington DC analysis of smoking, vaping, taxes, MSA funds, and prevention / cessesation funding.

*A critical feature of tobacco use is that morbidity and mortality spring primarily from the combustion process associated with traditional cigarettes. Nicotine, a chemical found in tobacco, is addictive and may not be safe in extreme doses but it, by itself, is not the source of harm from tobacco/smoking. As a result, policymakers must take this into account when considering tax rates for nicotine/tobacco-based products. The harm-reduction approach taken in this Commentary recognizes that cigarettes kill and that if alternative nicotine systems are known with certainty to contain a small fraction of the toxins in cigarettes, this is sufficient to attempt to divert users away from the killer products toward the lower-risk ones, even with uncertainty surrounding the lifecycle health impacts of the latter.

*Several identifiable social groups experience high rates of tobacco use: individuals with poor mental health, First Nations and Indigenous Communities (FNICs), the homeless and individuals who identify as LGBTQ+. For many in these communities, tobacco is both a comfort and a burden: nicotine provides the comfort while the toxins debilitate the body and the mind. The objective of reducing smoking must become more keenly focused upon who is still smoking and why. If nicotine alone provides minimal health damage and at the same time provides satisfaction to users, then the “war on tobacco” needs to separate out combustion-related tobacco toxins from nicotine. These high nicotine-use social groups also have lower average incomes than the population at large and, therefore, should not be denied access to less-expensive nicotine by limiting access to lowerpriced ANDS (Alternative Nicotine Delivery Systems).  

*Nice presentation that gives a lot of historical information on vapor technology, links to several studies, and a broad view of policy implications

*Covers smoking and vaping. Clickable map for state by state analysis

*Stats on vape taxes in the USA

*Page contains several maps of taxes on several kinds of tobacco and vapor products.

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* Data from the Centers for Disease Control and Prevention’s (CDC) youth surveys indicate that vaping rates among high school students increased between 2017-2019, after vape taxes were imposed in several jurisdictions.

*Of eight states that had e-cigarette taxes prior to 2019, seven saw an increase in proportions of young adult smokers after their state e-cigarette tax went into effect.

*New York State’s 20 percent excise tax on vapor products and nearly 9 percent sales tax also do not apply to the Shinnecock and other tribes. Essentially, Silva said, patrons can spend almost 30 percent less than they normally spend, and nobody has to worry about breaking the law.

*Using data from 35,000 national retailers from 2011 to 2017, researchers found that for every 10% increase in e-cigarette prices, e-cigarette sales dropped 26%. But the same 10% increase in e-cigarette prices caused traditional cigarette sales to jump by 11%.

*With all good intentions to reduce the underage use of a product designed for adults, the question remains: Is increasing excise taxes to punitive levels the best way to achieve this honorable target? Punitive excise levels not only impact minors but also limit the availability of vapor products to adults, who are trying to quit smoking.

*It is a principle of good taxation policy that taxes remain as neutral as possible. That means taxes should neither encourage nor discourage personal or business decisions. Legislators should pass regulations rather than adopt taxes to achieve regulatory goals. Furthermore, they should make sure that current regulations are enforced.

*Taxes on vices are tempting but unreliable source of revenue.

*This is the paradox of sin taxes, the class of taxes that includes tobacco. These extra dollars and cents levied on products and activities considered detrimental to consumers—traditionally tobacco, alcohol, and gambling—are intended to accomplish two contradictory goals: Like all taxes, they generate revenue for the taxing entity, but they also aim to deter the behavior being taxed—which can ultimately negate the first goal.

*Since 2002, nearly every state has enacted a cigarette tax in-crease to fund health care, discourage smoking, or to help balance state budgets.

*Cigarette taxes are regressive: that is, low- and middle-income taxpayers pay more of their income in these taxes, on average, than do upper-income families.  

*Economists say that imposing a federal tax on vaping could discourage millions of smokers from kicking the habit.

*[https://www.ecigarettedirect.co.uk/james-dunworth-bio By James Dunworth]

*Could billions of dollars in tobacco taxes be one of the factors behind the attack on a disruptive industry?  

*Several posts on vaping and taxes

*Accused of selling "loosies"

*For most non-profits, private donations are their only means of funding. But, by making the case that they provide a public service, some health advocacy groups have succeeded in securing a steady supply of taxpayer funds."

*Anti-tobacco advocates have also convinced state governments to hand millions of dollars over to them. For example, in 1988 Californians voted on Proposition 99, a ballot measure to triple the state’s tax on cigarettes and extract a $1.4 billion windfall from smokers over three years. Of that money, 25 percent was earmarked for tobacco control research and health education programs. Because the anti-smoking groups in California expected to receive some of that $350 million, the measure triggered a lobbying bonanza, with groups like the American Cancer Society, American Heart Association, and American Lung Association throwing their considerableweight and cash behind Prop 99"... (More on this on page 21 [22/100])

*Cigarette taxes are regressive. Poor New Yorkers spend close to a quarter of their income (23.6%) on tobacco.

*Only about half of the families that qualify are enrolled in SNAP, but when cigarette taxes go up, people sign up in droves, so much so that, after a tax hike, an eligible but unenrolled household is almost 10 times as likely to sign up for food stamps than to have a member quit smoking. (SNAP, formerly known as the Food Stamp program, is a federal benefit program that helps low-income households buy food.)

*The emails obtained by The Sun about the 2020 legislation, including one labeled as a “draft term sheet” and marked “highly confidential,” show Altria was negotiating the measure with Polis and health groups.

*While Proposition EE raises taxes on most tobacco and nicotine products in Colorado, it actually slashes them for so-called modified-risk tobacco products. Altria sees those products, which are part its IQOS system, as its future. Vaping shops objected to the MRTP discount, saying they lack the resources to seek an MRTP designation for their merchandise from federal regulators and that Altria would be given another market advantage.

*The founder of Border Force's illegal tobacco squad says one in five cigarettes smoked in Australia is illegal and demand has spawned a smuggling trade worth hundreds of millions of dollars each year, with a recent record-breaking case in Western Australia.

* the black market for illegal tobacco – imported mainly from Asia and the Middle East – has grown, with the ATO estimating about $650 million in potential tobacco excise revenue was lost in 2017-18.

*The potential lost tax revenue of the products was estimated by Alberta Gaming, Liquor and Cannabis (AGLC) to be more than $972,000.

*Most of the cigarettes Khatib bought were allegedly sold in Chicago, where the state excise tax is $1.98 per pack compared to 17 cents per pack in Missouri. Khatib and Qaddoumi allegedly kept the inflated profits.  

*The women admitted they had driven around the St. Louis area in a rented car buying them up [160 cartons of cigarettes], with plans to sell them back in New York. In addition to the recovered cigarette cartons, police found about two dozen fake credit cards that the women apparently used to buy them.

*Tobacco use has declined because of measures such as high taxes on tobacco products and bans on advertising, but worldwide there are still more than one billion people who regularly use tobacco, including many who purchase products illicitly. By contrast to many other commodities, taxes comprise a substantial portion of the retail price of cigarettes in the United States and most other nations. Large tax differentials between jurisdictions increase incentives for participation in existing illicit tobacco markets. In the United States, the illicit tobacco market consists mostly of bootlegging from low-tax states to high-tax states and is less affected by large-scale smuggling or illegal production as in other countries.

*This report estimates the portion of the total U.S. tobacco market represented by illicit sales has grown in recent years and is now between 8.5 percent and 21 percent. This represents between 1.24 to 2.91 billion packs of cigarettes annually and between $2.95 billion and $6.92 billion in lost gross state and local tax revenues.

*Washington’s Department of Revenue estimates the state lost about $376 million in tax revenue in 2012 to cigarette tax evasion. An estimated 35 percent of the cigarettes in Washington are contraband.

*Taxes and bans often raise the concern over the creation of black markets

*Tax increases often have some of the same reasons for opposition, including the increase in a black market, safety of illecit products, tax evasion, and more law enforcement involvement due to black markets.

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