Rhode Island Gov. McKee’s proposed e-cigarette tax is a bad approach to public health

One part of Rhode Island Gov. Daniel McKee’s proposed state budget is stirring up controversy: a tax on e-cigarettes, the most popular alternative to smoking traditional cigarettes. The state budget proposal is incredibly harsh, seeking to impose an 80 percent tax on e-cigarettes. If adopted, a tax like this could disincentivize people from using safer alternatives to traditional cigarettes. 

Cigarette tax advocates use many popular arguments to make their case, arguing that taxes deter people from smoking, encourage people to quit, and cover the costs of smoking-related diseases in the healthcare system. However, any benefits must be weighed against the regressive nature of these taxes as most smokers have lower incomes, and higher taxes could cause an increase in illicit sales.

In Rhode Island, one in five cigarette packs sold is from out of state. 

Taxes on e-cigarettes can be even more detrimental. Many people misunderstand the potential benefits of e-cigarettes, believing they are just as or more harmful than cigarettes. However, e-cigarettes are safer than traditional cigarettes and help smokers quit, as acknowledged by the Food and Drug Administration and health agencies in countries from the United Kingdom to Canada. The prestigious Cochrane Review concludes e-cigarettes are more effective than traditional nicotine replacement therapies in helping smokers quit cigarettes.

Because e-cigarettes are substitutes for traditional cigarettes, policies that make e-cigarettes more expensive incentivize people to continue smoking cigarettes instead of switching to a safer alternative. 

A growing body of evidence shows how harmful e-cigarette taxes can be on public health. An analysis of Minnesota’s 95 percent e-cigarette tax found 32,400 more smokers than there would have been without the tax.

A separate study focusing on young adults aged 18-25 found e-cigarette taxes were associated with reduced vaping but were similarly associated with increases in smoking. These effects are also seen in youth aged 18 or younger, with the authors concluding that “the unintended effects of… taxation may considerably undercut or even outweigh any public health gains.”

Just as revealing as the empirical literature is how financial analysts reacted when the United Kingdom announced a new vape tax in March, with experts at Citibank believing higher taxes on vapes are good news for the bottom line of two big tobacco companies. The higher the e-cigarette tax, the higher the likelihood that people will smoke traditional cigarettes. 

Rhode Island already suffers from an illicit vape market thanks to its prohibition of flavors other than tobacco, which is also set to be codified in the budget. However, implementing such a high vape tax would supercharge the illicit market, especially as it is set to be higher than taxes in New Hampshire, New York, Massachusetts, and Connecticut. Rhode Island’s legitimate vape retailers who are helping people quit smoking and providing employment opportunities while doing so would be severely impacted. When Pennsylvania introduced a 40 percent vape tax in 2016, 110 vape shops shut their doors within one year. 

Around 1,800 Rhode Islanders die every year from smoking-related diseases. Many smokers wish to quit cigarettes but find products like nicotine patches and gums, which have a 90 percent failure rate, unsatisfying and therefore fail. E-cigarettes are a critical tool for reducing the harm associated with smoking. A fundamental principle of tobacco tax policy should be that less dangerous products are taxed significantly lower than the most dangerous products. If these taxes aim to improve public health, the vape tax should be substantially lowered or scrapped altogether. Rhode Island does not need to raise revenue off the backs of people trying to quit smoking.

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