Image by Maarten van den Heuvel

CALIFORNIA VAPOR TAX IGNORES TOBACCO HARM REDUCTION,

WON'T IMPACT YOUTH E-CIGARETTE USE

June 2, 2020

By: Lindsey Stroud

KEY POINTS:

  • Included in the Governor’s Budget Proposal is a new tax on vapor products and would begin and on “January 1, 2021, and will be $2 for each 40 milligrams of nicotine in the product, equivalent to the tax on a pack of cigarettes.”

  • The new tax is included “[i]n order to address the rapidly increasing youth use of potent nicotine-based vaping products.”

  • There is no evidence vaping taxes will stop youth use of vaping devices.

  • In 2016, Pennsylvania enacted a 40 percent wholesale tax on vaping products.

    • An analysis on the effects of Pennsylvania’s wholesale tax on youth e-cigarette use found young Pennsylvanians in middle and high school actually increased their use of e-cigarettes in the period following the implementation of the tax.

  • Vapor taxes are sin taxes and disproportionately impact lower income people.

  • In 2016-17, 16.2 percent and 16.3 percent of Californian adult smokers were uninsured or on Medicaid/Medi-Cal, respectively.

    • Only 6.7 percent of smokers had a Bachelor’s degree, compared to 16 percent that had not received a high school diploma.

    • 15.8 percent of California smokers had incomes that were 0 to 99 percent of the federal poverty level (FPL), compared to 7.7 percent of smokers with income ranges of 300 percent “FPL or Higher.”

  • A majority of adult vapers are former smokers. Indeed, in a survey of nearly 70,000 American adult vapers, only 5.2 percent “reported being never smokers.”

  • Many California youth are not using e-cigarettes frequently.

  • In 2019, only 2.8 percent of San Diego high school students reported daily vapor product use.

    • 84 percent of San Diego high school students reported not using an e-cigarette in the 30 days prior to the survey.

  • In San Francisco, only 1.9 percent of highs school students reported using e-cigarettes daily and 84 percent of students reported not using a vapor product in the 30 days prior to the survey.

    • 31.1 percent of students reported ever using an electronic cigarette or vaping device.

  • California spends little on tobacco control. In 2019, California received an estimated $2.8083 billion in tobacco taxes and settlement payments. In the same year, California allocated only $250.4 million in state funds, and only 8.9 percent of tobacco monies, toward tobacco control programs.

  • In 2018, the vaping industry provided more than $2.9 billion in economic output in the Golden Gate State. In the same year, the vapor industry employed more than 6,600 Californians, generating over $346 million in wages alone. California received over $183 million in state taxes attributable to e-cigarettes and vapor products in 2018

California Governor Gavin Newsom is seeking to increase the taxes on electronic cigarettes and vaping devices. Included in the Governor’s Budget Proposal is a new tax on vapor products and would begin and on “January 1, 2021, and will be $2 for each 40 milligrams of nicotine in the product, equivalent to the tax on a pack of cigarettes.” The new tax is included “[i]n order to address the rapidly increasing youth use of potent nicotine-based vaping products.”

Although addressing youth tobacco and vapor product use is laudable, excise taxes have very little effect on youth use of such products. Rather, these “sin” taxes are inherently regressive and disproportionately impact lower income persons. Further, the Golden Gate State dedicates very little in existing tobacco monies on programs that can help smokers quit – it is disingenuous that policymakers would impose a tax burden on California adults that have successfully used e-cigarettes to quit smoking combustible cigarettes.

Although vape tax proponents believe it will help deter youth use of e-cigarettes, their belief is not backed up by recent evidence. An analysis on the effects of Pennsylvania’s 2016 40 percent wholesale tax found it did not deter youth e-cigarette use.

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.

Vapor taxes are sin taxes and disproportionately impact lower income people. For example, in 2016-17, 16.2 percent and 16.3 percent of Californian adult smokers were uninsured or on Medicaid/Medi-Cal, respectively. Only 6.7 percent of smokers had a Bachelor’s degree, compared to 16 percent that had not received a high school diploma. Further, 15.8 percent of California smokers had incomes that were 0 to 99 percent of the federal poverty level (FPL), compared to 7.7 percent of smokers with income ranges of 300 percent “FPL or Higher.”

A majority of adult vapers are former smokers. Indeed, in a survey of nearly 70,000 American adult vapers, only 5.2 percent “reported being never smokers.” Although it is disingenuous in general to tax such products, lawmakers should refrain from applying taxes to create parity between combustible cigarettes and vapor products, as e-cigarettes are significantly less harmful than smoked tobacco.

In 2015, Public Health England (PHE), a leading health agency in the UK, declared “that e-cigarettes are around 95% safer than smoked tobacco and they can help smokers to quit.” The agency reiterated this finding in 2018, noting that “stating that vaping is at least 95% less harmful than smoking remains a good way to communicate the large difference in relative risk.”

Other public health agencies including the Royal College of Physicians, the National Academies of Sciences, Engineering and Medicine, and the American Cancer Society (ACS) have acknowledged the reduced harm of electronic cigarettes and vaping devices. Indeed, in 2019, ACS noted that “e-cigarette use is likely to be significantly less harmful for adults than smoking regular cigarettes […] because e-cigarettes do not contain or burn tobacco.”

Moreover, many California youth are not using e-cigarettes frequently. Although statewide results from the 2019 Youth Risk Behavior Survey have yet to be released, San Diego and San Francisco have published their 2019 surveys. In 2019, only 2.8 percent of San Diego high school students reported daily vapor product use. Further, 84 percent of San Diego high school students reported not using an e-cigarette in the 30 days prior to the survey. In San Francisco, only 1.9 percent of highs school students reported using e-cigarettes daily and 84 percent of students reported not using a vapor product in the 30 days prior to the survey. Further, only 31.1 percent of students reported ever using an electronic cigarette or vaping device.

Should lawmakers want to address youth use of tobacco and vapor products, they ought to dedicate more of existing tobacco monies on tobacco control programs, including education and prevention. For example, in 2019, California received an estimated $2.8083 billion in tobacco taxes and settlement payments. In the same year, California allocated only $250.4 million in state funds, and only 8.9 percent of tobacco monies, toward tobacco control programs. To put it in greater perspective, in 2018, tobacco companies spent $250.4 million marketing tobacco products in the Golden Gate State.

Moreover, a vapor tax will stunt a nearly $3 billion industry in California. According to the Vapor Technology Association, in 2018, the vaping industry provided more than $2.9 billion in economic output in the Golden Gate State. In the same year, the vapor industry employed more than 6,600 Californians, generating over $346 million in wages alone. California received over $183 million in state taxes attributable to e-cigarettes and vapor products in 2018.

Rather than imposing draconian taxes on tobacco harm reduction products, lawmakers should promote e-cigarettes as a product that can help adult smokers quit combustible cigarettes. Further, should lawmakers truly want to address youth tobacco and vapor product use, they ought to dedicate more than 8 percent of tobacco monies toward tobacco control programs.

 

Nothing in this analysis is intended to is intended to influence the passage of legislation, and it does not necessarily represent the views of Tobacco Harm Reduction 101. For more information on vapor products in California, please visit Tobacco Harm Reduction 101’s California page at www.thr101.org/california.

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©2020 by Tobacco Harm Reduction 101.