On July 1, the cost of electronic cigarettes and associated liquids skyrockets in Vermont as legislation passed earlier this year takes effect. The tax hike was made in the name of public health, especially of children. But the 92 percent wholesale tax, for which consumers will bear the burden, could hurt marginalized Vermonters and people seeking a safer alternative to combustible tobacco.
Signed into law on May 23, Vermont’s Act 28 amended the existing Tobacco Products Tax by redefining “other tobacco products” to include non-tobacco products, such vapes and e-liquids, which it recognizes to be “tobacco substitutes.”
Republican Governor Phil Scott framed the new tax as a moral and medical imperative. “I think you all know it’s not my first instinct to add a tax,” he said at his January budget address, “but with a growing health risk for our kids, I’m proposing to levy the same tax as we do on tobacco products” in order to instruct young Vermonters about “the dangers of these behaviors.”
In 2017, a little over 1,200 Vermont middle schoolers (9 percent) had ever tried vaping, a 2 percent increase from 2015. But only 4 percent, or a little more than 550 kids, had used in the past 30 days. Drug policy researcher Dr. Sheila Vakharia, at a recent Filter panel on tobacco harm reduction, noted how the few available indicators on teen vaping often fail to capture important variables, like frequency of use, that might suggest problematic use.
The Cancer Action Network endorsed the new taxation policy, stating that “this tax will save lives”—despite its parent organization, the American Cancer Society, acknowledging that nicotine vapor contains “significantly lower amounts” of cancer-causing chemicals than combusted smoke.
The potential to reduce harms of tobacco will likely be undercut by the tax. In 2016, around one in five cigarette smokers in Vermont used e-cigarettes to reduce their use of combustibles. David Sweanor, a leading economist of tobacco and chair of the advisory board of the University of Ottowa’s Centre for Health Law, Policy and Ethics, explains that leveling the prices of cigarettes with vapes through taxes removes an incentive for users to switch to lower-risk alternatives. He saw this play out in South Korea.
“A year ago, heated tobacco products were replacing cigarettes at a very fast rate, with cigarette sales falling at an annual rate of over 10 percent,” he told Filter. “But the Korean government took advice like what is evidently being offered in your country. The taxes, health warning and public communications from the government began telling smokers that heated products were no less hazardous than smoking cigarettes.”
“Once this happened,” he continued, “the rate of switching to these products basically ceased. In May of last year Goldman Sachs estimated that heated products could replace 40 percent or more of the South Korean cigarette market in just a very few years. But that was stopped by bad policies that protected the cigarette business rather than the health of Koreans.”
People with the income to be unfazed by price hikes are not the ones who are vaping the most. In 2016, 7.8 percent people with annual income under $25,000 used vapes, compared with only 2.2 percent of people with incomes of $75,000 or more. People of color, who tend to have less socio-economic privilege, vaped at twice the rate of their white counterparts that same year (8.7 percent and 4.1 percent, respectively). Yet Vermont, despite its progressive reputation, is now imposing the second highest tax on vapes in the nation—just behind Minnesota. State sales tax will be added on top.
Vaping is not entirely without risk, just far less risky than smoking. The 2018 consensus report by the National Academies of Sciences, Engineering and Medicine concluded that e-cigarettes contain and emit numerous potentially toxic substances. But they also found there to be conclusive evidence—meaning evidence that is from “good-quality controlled studies with no credible opposing findings”—that completely swapping out combustibles for vapes cuts users’ exposure to a variety of toxicants and carcinogens. Public Health England has estimated vaping to be 95 percent less harmful than combustibles.
In light of this, a harm reduction approach would use taxation as a tool to make vaping more affordable than smoking.
NEW: How high are vapor excise taxes in your state?
Nine states and Washington, D.C. levy taxes on electronic cigarettes and vape pens, while several localities levy the tax independently from their states: https://t.co/7rE6dhBpOD @janellecamm pic.twitter.com/hXeHk1iuNI
— Tax Foundation (@taxfoundation) June 26, 2019
As Vermont’s new tax rate takes effect, policymakers at federal, state and city levels continue to contradict their supposed commitments to public health by making risk-reduced alternatives to smoking harder to access.
Photograph of E-Liquids at Vape Shop by Lindsay Fox via Wikimedia Commons
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