Every 10% increase in e-cigarette prices, dropped e-cig sales by 26%, and increased traditional cigarette sales by 10%.
Titled, “The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data,” the study aimed to examine the effect of e-cigarette taxes enacted in eight US states. Using data from 35,000 national retailers between 2011 and 2017, the researchers found that for every 10% increase in e-cigarette prices, e-cigarette sales dropped by 26%. However, the same 10% increase in e-cigarette prices caused an 11% increase in traditional cigarette sales.
“We estimate that for every e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead,” said concerned study co-author and economist from Georgia State University Michael Pesko.
Another member of the research team added that the recent “vape-related” lung disease should not overshadow all the diseases linked to traditional smoking. “Although vaping-related illnesses are a public health concern, cigarettes continue to kill nearly 480,000 Americans each year, and several reviews support the conclusion that e-cigarettes contain fewer toxicants and are safer for non-pregnant adults,” said Erik Nesson, an economics professor in the Miller College of Business at Ball State.
“We estimate that for every e-cigarette pod no longer purchased as a result of an e-cigarette tax, 6.2 extra packs of cigarettes are purchased instead.”Michael Pesko, Georgia State University
Meanwhile, another recent study analysing the situation in Minnesota, where a harsh 95% tax has been imposed on vaping products, has found that the tax has increased adult smoking and reduced smoking cessation across the state.
Minnesota’s high e-cig tax has halted smoking cessation rates
Sadly, Minnesota “boasts” one of the harshest e-cig taxes across the US, and it was also the first state to impose a tax on e-cigarettes by extending the definition of tobacco products to include e-cigarettes. This heavy 95% tax on the wholesale price, naturally proves to be quite the deterrent for people interested in using the products.
Data extracted from the Current Population Survey Tobacco Use Supplements from 1992 to 2015, with the aim of determining how this tax has affected smoking cessation rates among adult smokers, indicated that the high tax was directly linked to higher smoking rates and lower smoking cessation rates.
“..the e-cigarette tax increased adult smoking and reduced smoking cessation in Minnesota, relative to the control group, and imply a cross elasticity of current smoking participation with respect to e-cigarette prices of 0.13.”
“Our results suggest that in the sample period about 32,400 additional adult smokers would have quit smoking in Minnesota in the absence of the tax. If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period,” revealed the researchers.
Virus hammers vape producers – and taxes boost smoking
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