The Canadian Vaping Association (CVA) examines why taxes on vaping products lead to higher smoking rates

Hamilton, ON, Aug. 13, 2020 (GLOBE NEWSWIRE) — On May 14th, 2020, California passed a proposal to increase their already substantial tax on vapour products. Prior to May 14th, California imposed a 59.27% tax on the wholesale value of vape products. The state has now introduced an additional $2 tax for every 40mg of nicotine. This additional tax will come into effect on January 1st, 2021 and it is estimated that this will raise $32 million annually for the state.Governor Gavin Newsom has stated that the tax is being implemented as a deterrent for youth. Governor Newsom has also said he supports a full flavour ban for the same reason. While youth vaping is a concern, there are numerous alternative ways to address the issue which aren’t to the detriment of the health of adult smokers. Smoking rates are at a historic low, and this is partially credited to vaping. Flavour bans and excessive taxation will drive vapers back to smoking, thus undoing all the positive work of the many smoke free organizations that have encouraged the transition to vaping as a much less harmful alternative.The additional tax will increase the price of a JUUL pack by $8.25, and this $8.25 tax doesn’t even include the pre-existing wholesale tax. At the same time, cigarettes in California are taxed at only $2.87 per pack of 20, thus smoking becomes the cheaper option and therefore the more attractive option from a purely financial perspective. Taxing the products that cause illness at a lower rate than the solution is completely counter intuitive and counter productive. It is nonsensical that vapour products are being taxed at higher rate than cigarettes after being proven 95% less harmful by the Royal College of Physicians, a result that has been replicated through annual studies in each of the past six years.There is a plethora of research available which shows conclusively that taxation on vaping products serves only to increase use of tobacco products, North America’s leading cause of death. One such study conducted by Minnesota, “The impact of E-cig taxes on smoking rates: Evidence from Minnesota,” found that taxing vaping products lead to an 8.1% increase in tobacco use and a smoking cessation decrease of 1.4%. It also concluded that if vapour products had not been taxed, an additional 32,400 adults would have quit smoking.A study by the National Bureau of Economic Research found that “while cigarette taxes reduce cigarette use and e-cigarette taxes reduce e-cigarette use, they also have important interactions on each other”. Michael Pesko, a health economist and assistant professor at Georgia State University, said in a related statement. “E-cigarettes and cigarettes are economic substitutes. So, if you raise taxes on one product, you will increase use of the other.”Pesko and other researchers drew upon sales data from 35,000 retailers across the nation for a seven-year period and concluded that for every 10 percent increase in e-cigarette prices, vaping product sales dropped 26 percent. At the same time, the researchers concluded that the higher tax on e-cigarettes resulted in an 11 percent increase in sales of traditional cigarettes. “We estimate that for every one e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” said Pesko. “The public health impact of e-cigarette taxes in this case is likely negative.”The idea that flavoured vaping products contribute to youth vaping is a common misconception that has been discredited repeatedly, including in a report published by the Centers of Decease Control and Prevention (CDC). According to the CDC report “Tobacco Product Use and Associated Factors Among Middle and Highschool Students”, 77% of youth that have tried vaping, did so for a reason other that flavours, the most common of which was simply curiosity.Darryl Tempest, Executive Director of the CVA states, “Discouraging youth vaping needs to be a multi-faceted approach that should not include actions such as flavour bans or unreasonable taxation which serve only to harm adult smokers. Some of the practical solutions advocated by the CVA include education, restricting sales to adult-only specialty vape stores, harsher penalties for selling to minors and limiting nicotine to 20 milligrams per millilitre. In combination, these solutions will be far more effective than the counter productive band-aid of prohibition and taxation.”Through flavour bans and taxation, not only will governments drive vapers back to smoking thus slowing or reversing the decline in smoking rates, but they will encourage a flood of illicit and potentially dangerous products. Studies have shown that, in states where flavour bans exist, most consumers report being able to easily acquire flavoured products from the black market. The EVALI outbreak last fall which was caused entirely by unregulated black-market products should serve as a warning of the dangers to public health that unregulated products pose.Smoker’s transitioning to vaping will inevitably decrease tobacco tax revenues.  In Canada, it has been calculated that these lost revenues will be more than offset by the reduced burden on our publicly funded health care system. In countries where this is not the case, it is crucial that governments find alternative means to make up the lost revenues that are not at the expense of public health. Harm reduction products must be taxed at such, and always at a lower rate than the harmful products they are intended to replace.  Vaping has been repeatedly proven to be the most successful harm reduction product globally; governments must reflect this in their taxation policies in order to achieve the goal of a smoke free future. Darryl Tempest
The Canadian Vaping Association 6472741867
[email protected]

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