Legislators in New Jersey are examining a proposal to place a tax on vaping products and require licenses for retailers of vaping shops. The proposed legislation intends to impose a 75 percent tax on the “receipt from every sale, use or distribution of an electronic cigarette by a distributor or a wholesaler to a retail dealer or consumer.” Such draconian legislation will generate a negative impact on public health in the Garden State while hindering the economic gains vaping products provide.

 

Opponents of taxes on e-cigarettes and vaping devices, also called tobacco harm reduction (THR) products, argue they are counterproductive and offset some of the public health gains these products provide. These claims are supported by the available research, which shows e-cigarettes and vaping products are significantly less harmful than tobacco cigarettes.

 

In 2018, the National Academies of Sciences, Engineering, and Medicine concluded switching from combustible cigarettes to e-cigarettes “results in reduced short-term adverse health outcomes in several organ systems.” This finding is in line with earlier research findings.

 

In 2017, NHS Health Scotland issued a statement promoting the use of THR products, finding them “less harmful than smoking.” The Royal College of Physicians stated in 2016 the health hazards associated with THR products are “unlikely to exceed 5% of the harm [caused by] smoking.” In 2015, Public Health England acknowledged e-cigarettes to be an estimated “95% safer than smoking.”

 

Additionally, it has been suggested using THR products could provide important financial benefits to states. J. Scott Moody, chief executive officer and chief economist as State Budget Solutions, analyzed the impact of THR products on health care costs. Moody estimated Medicaid savings could have amounted to $48 billion in 2012 if e-cigarettes and vaping devices had been substituted by current Medicaid smokers.

 

Such an extreme tax will negatively impact the vaping industry in New Jersey. This has already occurred in neighboring Pennsylvania. The Keystone State passed a 40 percent wholesale tax on vaping products in 2016. Since the tax’s implementation, an estimated 120 vaping shops have shut down. Vape shops are a substantial part of the economy. Research indicates these businesses “generate an annual non-online sales of more than $300,000 per store” and average $26,000 in monthly sales. Higher taxes will cause stores in New Jersey to permanently close their doors, which means consumers of THR products will be forced to shop elsewhere, including online and out of state, for their vaping and e-cigarette needs.

 

Lawmakers in the Garden State should deter from onerous taxes on THR products, such as e-cigarettes and vaping devices. These products have proven to be a valuable alternative for millions of cigarette smokers and have helped offset health care costs while contributing to the state’s economy. Rather than limiting their potential through unnecessary and burdensome legislation, lawmakers should promote their use as tobacco cessation tools.

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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 or Tobacco Harm Reduction 101.