Vaping tax increases cigarette smoking

Heidi Docter, Reporter

A UW Oshkosh professor’s research on the relationship between the taxation of e-cigarettes and the sales of cigarettes reveals a dangerous consequence of e-cigarette taxation.

Chad Cotti, chair of the economics department at UWO, worked with a team of five other health economists across the nation to research the impact that e-cigarette taxation has on the sales of e-cigarettes, and whether consumers shift back to traditional cigarettes when e-cigarette taxes are implemented.

As a health economist, Cotti studies the economic side of “sin goods,” or products related to unhealthy consumption, such as alcohol and cigarettes.

“What economics has taught us, among other things, is that if you make things more expensive, people will consume less of it,” Cotti said. However, by increasing taxes on vaping devices, smokers flock towards the now less expensive alternative: traditional cigarettes.

The researchers found that when e-cigarette taxes increase by 10%, sales of vaping devices decrease by 26% and traditional cigarette sales rise by 11%.

The goal of government policies on unhealthy products is to decrease consumption, most often by raising the price on the products.

“When we decided to put taxes on cigarettes, 30 to 40 years ago for the first time, there wasn’t a good substitute for consumers to turn to,” Cotti said. “With e-cigarettes, there is a really good substitute: regular cigarettes.”

Cotti said the unhealthy product that smokers are buying is nicotine.

So, when a taxation policy aimed to decrease smoking only covers one of the many nicotine devices on the market, consumers will turn to other unhealthy products to get their fix.

April Lee
Alex Mangmoradeth exhales a cloud of vapor. Researchers found that when e-cigarette taxes increase by 10%, sales of vaping devices decrease by 26% and traditional cigarette sales rise by 11%.

Since e-cigarettes are a relatively new product and vaping has only recently become a phenomenon, it only makes sense to research sin goods, Cotti said.

“Young adult use of e-cigarettes every day or some days increased from 2.4% in 2012 and 2013 to 5.2% in 2017, and increased again to 7.6% in 2018 based on a recent analysis,” the Truth Initiative, a nonprofit health organization, website states. “44.3% of young adult current e-cigarette users were never smokers before trying e-cigarettes.”

Cotti’s team hasn’t explored which demographics are flowing back to traditional cigarettes just yet, but he said that traditional cigarette taxation policies are more effective at reducing consumption among youth smokers.

“A tax of equal size largely is going to affect the teenager more than the adult because it affects their income more because they have less,” Cotti said.

Cotti and his team of health economists plan to research the characteristics of the consumers flowing toward traditional cigarettes in the future.

He hopes their research helps to inform the discussion around vaping.

“We have to make sure people are fully educated about the health consequences of those behaviors so that when they make those choices, they’re making well-informed choices,” Cotti said