Taxes on e-cigarettes lead to more traditional cigarettes being purchased, study shows

WAUSAU, Wis. (WSAW) - A new study funded by the National Institutes of Health shows that raising taxes on e-cigarettes in an attempt to steer people away from vaping may cause people to purchase more traditional cigarettes.

E-cigarette products shown at the Marathon County Health Department (WSAW photo 2/20/20)

The Effects of E-Cigarette Taxes on E-Cigarette Prices and Consumption: Evidence from Retail Panel Data study was published Tuesday by the National Bureau of Economic Research.

The study was conducted by six economists, scanning data from 35,000 retailers across the country between the years of 2011 and 2017. From their findings, researchers can estimate that for every 1 e-cigarette pod not purchased, 6.2 extra packs of cigarettes are purchased in instead.

“One of the things we were interested in measuring was ‘What’s the effect of e-cigarette taxes, that are very new, on e-cigarette consumption, or vaping, how much did it reduce vaping?’” said Dr. Chad Cotti, professor of economics at University of Wisconsin – Oshkosh and one of the researchers in the study. “There was a pretty notable decline in e-cigarette usage or vaping when the e-cigarette taxes went into effect, but there was also a non-trivial increase in regular smoking or traditional cigarette consumption."

Wisconsin was not one of the states reviewed in the study because its e-cigarette tax didn’t go into place until 2019. As of January of 2020, the Centers for Disease Control lists Wisconsin as one of 20 states with a tax in place for e-cigarette products.

“Tobacco is still the number one cause of preventable death and disease,” said Jenna Flynn, a public health educator with the Marathon County Health Department who also coordinates the Central Wisconsin Tobacco Free Coalition. “I think the intention to increase taxes is to curb any nicotine product use.”

As results from research show traditional cigarette sales increasing as taxes are increased, Cotti says it prompts an interesting question.

“From a public health standpoint, e-cigarettes are also not good for you; this is debated, but they’re probably less bad for you than traditional cigarettes because they have less toxicants and heavy metals and things like that in them,” explained Cotti. “People are using less of e-cigarettes, which is bad for them, but if they’re using more cigarettes which may even be worse, then it kind of begs the question of ‘What the true total public health net effects are of that tax?’”

Flynn feels that those taxes may be leading to a positive impact on future generations.

“Youth are really price-sensitive,” explained Flynn. “Raising prices of any tobacco product will decrease the likelihood of them using those nicotine products. It’s really up to decision-makers, what they want to do to prevent another generation from becoming addicted to nicotine.”

The six economists that conducted the study are Dr. Cotti, Dr. Erik Nesson at Ball State University, Dr. Nathan Tefft at Bates College, Dr. Michael Pesko at Georgia State University, Dr. Catherine Maclean at Temple University and Dr. Charles Courtemanche at the University of Kentucky.