Research & Commentary: Attention Bay State Lawmakers: Sin Taxes Do More Harm Than Good

Published May 30, 2019

Massachusetts legislators recently introduced companion legislation to protect “youth from nicotine addiction,” by increasing the excise tax on cigarettes and cigars. The bills would also impose a new tax on electronic cigarettes and vaping devices.

S.1606 and H.2436 would increase the Bay State’s cigarette tax by 50 cents, to $4.01 per pack. The proposals would also double the excise tax on cigars, from 40 percent to 80 percent of the wholesale price. Both bills would also create a tax on e-cigarettes, “including any component, part, or accessory of such device,” at the rate of 75 percent of the wholesale price. The tax on vaping products would not include batteries and chargers, which are sold separately.

Although lawmakers’ intention to curb youth nicotine use is laudable, taxes are ineffective in curbing youth use of tobacco and e-cigarette products.

There is no evidence vaping taxes will stop youth use of these products. In 2016, Pennsylvania enacted a 40 percent wholesale tax on vaping products. A Heartland Institute analysis on the effects of Pennsylvania’s wholesale tax on youth e-cigarette use found young Pennsylvanians in middle and high school actually increased their use of e-cigarettes in the period following the tax’s implementation. Notably, e-cigarette use among 10th and 12th graders increased from 20.4 and 27 percent, respectively, in 2015 to 21.9 and 29.3 percent in 2017.

Moreover, cigarette taxes disproportionately impact lower income persons and foster black markets. In fact, e-cigarettes are effective tobacco cessation tools and their use should be promoted, not subjected to sin taxes that are typically used to deter use of harmful products.

Lower income persons are disproportionately impacted by cigarette tax increases. A Cato Journal article found from 2010 to 2011, “smokers earning less than $30,000 per year spent 14.2 percent of their household income on cigarettes, compared to 4.3 percent for smokers earning between $30,000 and $59,999 and 2 percent for smokers earning more than $60,000.” Furthermore, the Centers for Disease Control and Prevention (CDC) notes Americans with only a high school diploma smoke for a period that is “more than twice as many years as people with at least a bachelor’s degree.”

Additionally, increased cigarette taxes will undoubtedly lead to more cigarette smuggling. Massachusetts already ranks 6th in the nation for cigarette smuggling, according to the Tax Foundation. Researchers at the Mackinac Center for Public Policy found that after Massachusetts’ last cigarette tax increase, cigarette smuggling increased from 12 percent in 2013 to 29.3 percent in 2014.

Deeply problematic in the legislation is the newly-created tax on e-cigarettes and vaping devices. These products have emerged as effective cigarette cessation tools, with an estimated three million American adults having used an e-cigarette to quit smoking. These tobacco harm reduction products are also more effective than traditional cessation methods as noted in a 2019 study in the New England Journal of Medicine, which found e-cigarettes to be “twice as effective as nicotine replacement therapy” in helping smokers quit.

Despite erroneous claims in the media, e-cigarettes are significantly less harmful than combustible cigarettes. In 2015, Public Health England reported “using e-cigarettes is around 95% safer than smoking.” A 2016 report from the Tobacco Advisory Group of the Royal College of Physicians concluded hazards from e-cigarettes were “unlikely to exceed 5% of the harm from smoking.” Other public health groups including the National Academies of Sciences, Engineering, and Medicine and the American Cancer Society have acknowledged the reduced harm of e-cigarettes and vaping devices.

Massachusetts dedicates very little funding on tobacco prevention and cessation efforts. In 2018, the Bay State received an estimated $884 million in tobacco settlement payments and taxes, yet only allocated $3.7 million, less than one percent, to tobacco prevention programs. It is disingenuous to tax those who have used e-cigarettes to quit smoking, while dedicating very little tobacco moneys to help smokers quit.

Rather than relying on draconian taxes on tobacco and vaping products, lawmakers should reform how they currently spend tobacco moneys and earmark more funding towards youth prevention efforts. A good example is Alaska, which “allocated $9.5 million in state funds to tobacco prevention,” more than 93 percent of the CDC’s annual spending target, and received an A-ranking from the Lung Foundation.

Moreover, lawmakers should promote e-cigarettes and vaping devices and not apply sin taxes on these tobacco harm reduction products.


The following articles provide more information on sin taxes and tobacco harm reduction.

Research & Commentary: Top Ten Reasons Not to Raise Tobacco Taxes
Former Heartland Institute Government Relations Director John Nothdurft argues targeted tax increases serve only to push sound fiscal policies and real budget reforms to the public policy back burner. Legislators concerned about the public health effects of tobacco should encourage the use of readily available smoking cessation products and services instead of supporting bad tax policy.


Five Things to Consider Before Raising Tobacco Taxes: A Review of the Research
This Heartland Institute Policy Brief argues, “Tax increases above current levels are not justified by appealing to the costs smokers impose on nonsmokers. Smokers already pay more than this measure could justify.”


Poor Smokers, Poor Quitters, and Cigarette Tax Regressivity
Dr. Dahlia Remler of the Department of Health Policy and Management at Columbia University demonstrates cigarette taxes are regressive, burdening poor individuals more than other groups.


Debunking the “Tax Thee, But Not Me” Myth: Five Reasons Why Non-Smokers Should Oppose High Tobacco Taxes
The nonpartisan National Taxpayers Union observes, “The per-capita state and local tax burden in high-tobacco tax states is 8 percent above the national average, while the general tax bill for residents of low-tobacco tax states is 15 percent below the national average.”


Cigarette Taxes and Smoking: Will Higher Taxes Yield a Public Benefit?
Kevin Callison and Robert Kaestner of the Cato Institute summarize their study focusing on the effect of recent, large cigarette-tax increases on the smoking behavior of adults ages 18–74. The data suggest the association between cigarette taxes and either smoking participation or number of cigarettes smoked is small, negative, and not usually statistically significant.


Vaping, E-Cigarettes, and Public Policy Toward Alternatives to Smoking
For decades, lawmakers and regulators have used taxes, bans, and burdensome regulations as part of their attempt to reduce the negative health effects of smoking. Recently, some have sought to extend those policies to electronic cigarettes. This booklet from The Heartland Institute urges policymakers to re-think that tax-and-regulate strategy. Policymakers should be mindful of the extensive research that supports tobacco harm reduction and understand bans, excessive regulations, and high taxes on e-cigarettes often encourage smokers to continue using more-harmful traditional cigarette products.

Research & Commentary: Randomized Trial Finds E-Cigarettes Are a More Effective Smoking Cessation Tool than Nicotine Replacement Therapy–commentary-randomized-trial-finds-e-cigarettes-are-more-effective-smoking-cessation-tool-than-nicotine-replacement-therapy
In this Research & Commentary, Lindsey Stroud, a state government relations manager at The Heartland Institute, examines a study in The New England Journal of Medicine that shows e-cigarettes and vaping devices are twice as effective as nicotine replacement therapy (NRT) in helping smokers quit using tobacco cigarettes. Nearly 700 participants were studied during a 52-week period. Researchers found that 18 percent of e-cigarette users reported abstinence, compared to 9 percent of those using NRT. Stroud wrote that “these latest findings provide more valuable information on the public health role that e-cigarettes and vaping devices provide for the 38 million cigarette smokers in the United States,” and she implores policymakers to regulate these devices in a way that promotes, rather than prohibits, their use.

Research & Commentary: Vaping Taxes Do Not Deter Youth Use of E-Cigarettes–commentary-vaping-taxes-do-not-deter-youth-use-of-e-cigarettes
In this Research & Commentary, Lindsey Stroud, a state government relations manager at The Heartland Institute, examines the effects of Pennsylvania’s 2016 40 percent wholesale tax on youth vaping. Using data from the Pennsylvania Annual Youth Survey, Stroud finds the tax did not curb youth e-cigarette use, and from 2015 to 2017, youth use of e-cigarettes increased in Pennsylvania. Stroud cautions lawmakers to avoid enacting taxes on e-cigarettes in an effort to address youth e-cigarette use.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, our Consumer Freedom Lounge, and PolicyBot, Heartland’s free online research database.

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