NEW HAMPSHIRE SHOULD AVOID DRACONIAN TAXES ON E-CIGARETTES AND VAPING DEVICES

March 14, 2019

Legislation in New Hampshire aims to curb the use of e-cigarettes and vaping products. If passed, Senate Bill 2 and House Bill 680 would subject all vaping devices, even those that do not contain nicotine, to a 65 percent tax.

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Proponents of the legislation believe it will help deter youth from using e-cigarette products. However, data reveal regulations on e-cigarettes increase youth combustible cigarette use. After initiating a task force to combat youth e-cigarette sales, Lancaster County, Nebraska reported sales of vaping products to minors decreased “from 21.2 percent in 2017 to 5.3 percent in 2018.” Meanwhile, sales of non-vaping tobacco products increased during the same period, from 5.9 to 8.7 percent. A 2015 study reached similar conclusions, finding bans on the sales of e-cigarettes to youth increased smoking rates by “1.0 percentage point.”

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Unfortunately, draconian taxes on tobacco harm reduction products negate the public health gains e-cigarettes provide, have adverse effects on youth combustible cigarette consumption, and threaten state and local economies.

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Despite calls for their ban, electronic cigarettes have emerged as an effective cessation tool. Approximately three million American adults have used e-cigarettes to quit smoking. A 2019 study found e-cigarettes are twice as effective as nicotine replacement therapy in helping smokers quit.

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Moreover, several of the public health groups that first linked tobacco cigarettes to cancer have found e-cigarettes are significantly less harmful than combustible tobacco cigarettes. The Royal College of Physicians estimates the use of electronic cigarettes is “unlikely to exceed 5% of the harm [caused by] smoking.”

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Not only should lawmakers refrain from taxing and overregulating tobacco harm reduction products because they offer public health benefits, but also because they have the potential to save billions of dollars in smoking-related health care costs. A State Budget Solutions study found that if all current smoking Medicaid recipients had switched from tobacco cigarettes to e-cigarettes, states’ Medicaid savings could have amounted to $48 billion in 2012.

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A similar analysis by The R Street Institute found that if just 1 percent of Medicaid enrollees were to switch from combustible tobacco cigarettes to vaping devices, Medicaid savings “will be approximately $2.8 billion per 1 percent of enrollees” over the next 25 years.

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Aside from being a useful harm reduction product, e-cigarettes and vaping devices have been an economic boon for local and state economies. A 2015 analysis estimated “U.S. brick-and-mortar vape shops generate annual non-online sales of more than $300,000 per store.” The industry is also expected to grow substantially over the next few years. In fact, the global electronic cigarette market “is estimated to reach $44,610.6 million by 2023.”

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As the Granite State currently dedicates very little funding to tobacco education and prevention efforts, it makes little sense for lawmakers to tax a product that helps smokers quit. In 2018, New Hampshire “received $261.3 million tobacco settlement payments and taxes,” yet spent only $140,000, less than 5 percent of funds, on prevention and cessation efforts.

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E-cigarettes are a robust tobacco harm reduction tool that can provide substantial health care cost savings and deliver revenues to local and state economies. Rather than imposing high and unnecessary taxes on e-cigarettes and vaping devices that hurt smokers looking to quit, lawmakers should focus on combating youth cigarette use.

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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.