Tax Buried in the “Build Back Better” Bill Is Likely to Increase Smoking Rates

The “Build Back better” bill includes a provision that imposes an income tax on all non-combustible nicotine products, e.g. Pouches and electronic cigarettes. Kenneth Warner is Dean Emeritus of University of Michigan’s School of Public Health. He explains it in this video. Washington Post Op-ed: This is bad news for public health, as it encourages more smoking.

Undoubtedly, the tax on ecigarettes was well-intentioned. The public is rightly concerned about youth vaping, and the deplorable marketing of some e-cigarettes by manufacturers. Legislators share these concerns. By substantially raising the price of e-cigarettes — by about 25 percent, for a typical user — the tax will certainly discourage youths from using these products. That benefit comes at a steep public health cost, however: The tax will increase cigarette smoking among adults — and quite possibly teenagers, too. An increase in smoking will result in a rise in death and disease in this country, as it kills approximately 480,000 Americans each year.

Problem with taxation is very simple. Economic studies demonstrate that cigarettes and e-cigarettes are substitutes for each other. Some cigarette smokers may switch to electronic cigarettes if cigarettes are more expensive than e-cigarettes. Conversely, if e-cigarette prices rise relative to cigarette prices — as they will under the legislation’s tax provision — some people will smoke cigarettes who would otherwise have used e-cigarettes.

Warner underlines (and I also highlighted this in blog posts previously) that it is not an assumption. Numerous peer-reviewed academic studies now show the substitution effect for young people.

Warner points out three possible groups who will be directly affected should the tax rise become law.

The individuals at risk fall into three groups: First, a subset of former smokers who quit smoking with e-cigarettes — hopefully a small subset — will gravitate back to smoking cigarettes, because the price of their substitute will have increased significantly. A second category of double users, which is a large group who use both e-cigarettes and cigarettes, will quit vaping altogether and opt for purely cigarette usage. Dual users often are still in transition from smoking. The tax will make it more difficult for them to quit. Third, the tax will discourage current smokers from vaping or switching to cigarettes.

A fourth group would be people (usually youth) who are interested in trying or experimenting with nicotine products. They will have greater incentives to use combustible cigarettes over e-cigarettes and other non-combustible alternatives. Warner understates the danger this tax rise could cause as it may increase youth’s use of combustible cigarettes.

Warner Media Group:

Unfortunately, surveys show that a high proportion of the public — about half — wrongly believe that e-cigarettes are as dangerous as, or even more dangerous than, cigarettes. It is a perception shared by most smokers. This discourages people from trying out e-cigarettes. While the price differential for e-cigarettes serves as a strong incentive, vaping would not be encouraged by the tax provision in new legislation.

Fear-mongering from anti-nicotine organizations and government agencies (such as the Surgeon General, the CDC), has persuaded many Americans that electronic cigarettes can be just as dangerous or even more hazardous than combustible cigarettes. These messages are harmful for the public’s health and wrong.

Warner’s conclusion:

One out of every seven American adults is a smoker today. The average loss of 20 years in life expectancy for a lifelong smoker is half. This loss is significantly reduced by quitting smoking even earlier in life. The cost of e-cigarettes increases, increasing the likelihood that people will continue to smoke. This is a bad policy.

Indeed. This section of the BB can kill.