LATEST VAPE TAX WOULD ELIMINATE TOBACCO HARM REDUCTION IN WASHINGTON STATE

April 23, 2019

KEY POINTS:

  • After reducing the tax burden, lawmakers in Washington State are aiming to tax e-cigarettes and vaping devices.

  • House Bill 1863 originally applied a 95 percent wholesale tax on vapor products, but it has since been amended to reduce the tax to 60 percent.

  • Lawmakers are hopeful the draconian tax would discourage e-cigarette use among youths. Although these Evergreen State lawmakers’ intent is laudable, there is no evidence vaping taxes discourage youth e-cigarette use.

  • Lawmakers are also seeking to provide tax parity between tobacco harm reduction products and combustible cigarettes, even though existing research shows e-cigarettes are significantly less harmful than tobacco.

  • In 2016, Pennsylvania enacted a 40 percent wholesale tax on vaping products. The tax led to the closure of 120 small businesses within just one year, and it had no effect on youth vaping, which increased after the tax was implemented.

  • According to the 2015 Pennsylvania Youth Survey (PAYS), 15.5 percent of middle and high school students reported using an e-cigarette within the past 30 days.

    • In 2017, PAYS found this increased to 16.3 percent of middle and high school students reporting past 30 day use of e-cigarettes.

    • Notably, e-cigarette use among 10th and 12th graders increased from 20.4 and 27 percent respectively, in 2015, to 21.9 and 29.3 percent of 10th and 12th graders reporting e-cigarette use in 2017.

  • Although 75 percent of the revenues received by the proposed tax would be deposited into a newly created “Essential Public Health Service Account” in the 2019–21 biennium, there is no set funding requirement mandating these tax revenues go toward tobacco prevention and cessation.

  • The state currently dedicates very little money to such efforts.

After reducing the tax burden, lawmakers in Washington State are aiming to tax e-cigarettes and vaping devices. House Bill 1863 originally applied a 95 percent wholesale tax on vapor products, but it has since been amended to reduce the tax to 60 percent. Lawmakers are hopeful the draconian tax would discourage e-cigarette use among youths.

Although these Evergreen State lawmakers’ intent is laudable, there is no evidence vaping taxes discourage youth e-cigarette use.

Lawmakers are also seeking to provide tax parity between tobacco harm reduction products and combustible cigarettes, even though existing research shows e-cigarettes are significantly less harmful than tobacco and should not be subjected to sin taxes that might discourage their use among current adult smokers.

Despite fearmongering headlines, e-cigarettes are much safer than combustible cigarettes. In 2015, Public Health England, a leading health agency in the United Kingdom, found e-cigarettes are 95 percent safer than traditional cigarettes. Since then, other public health groups have noted the reduced harm of e-cigarettes, including the Royal College of Physicians, the National Academies of Sciences, Engineering, and Medicine, and the American Cancer Society. Even Mitch Zeller, director of the Center for Tobacco Products at the U.S. Food and Drug Administration, has noted that people switching from combustible tobacco cigarettes to vaping products “would be good for public health.”

Washington State lawmakers should also know that vaping taxes passed in other states have caused significant economic harm. In 2016, Pennsylvania enacted a 40 percent wholesale tax on vaping products. The tax led to the closure of 120 small businesses within just one year, and it had no effect on youth vaping, which increased after the tax was implemented.

According to the 2015 Pennsylvania Youth Survey (PAYS), 15.5 percent of middle and high school students reported using an e-cigarette within the past 30 days. In 2017, PAYS found this increased to 16.3 percent of middle and high school students reporting past 30 day use of e-cigarettes. Notably, e-cigarette use among 10th and 12th graders increased from 20.4 and 27 percent respectively, in 2015, to 21.9 and 29.3 percent of 10th and 12th graders reporting e-cigarette use in 2017.

Moreover, it’s important to note the proposed tax would not necessarily be used to help smokers quit or educate youths on tobacco use. Although 75 percent of the revenues received by the proposed tax would be deposited into a newly created “Essential Public Health Service Account” in the 2019–21 biennium, there is no set funding requirement mandating these tax revenues go toward tobacco prevention and cessation. The state currently dedicates very little money to such efforts. In 2018, Washington State received an estimated $563 million in tobacco settlement payments and taxes, yet in the same year, the state dedicated just $1.4 million—less than 2 percent of tobacco moneys—on tobacco prevention and cessation programs.

Rather than taxing tobacco harm reduction out of existence, Washington State lawmakers should reform how the state currently spends its tobacco funds. E-cigarettes are a proven smoking cessation tool, one that has helped millions of American adults quit using tobacco cigarettes. Their use should be encouraged, not thwarted with draconian taxes.

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.

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