Research & Commentary: Draconian Tax in Arizona Could Wipe Out Vaping Industry

Published April 5, 2017

Vape shops could soon be forced to shut their doors due to legislation introduced in the Arizona Senate. Sponsored by state Sen. Juan Mendez (D-Tempe), the legislation proposes a 95 percent wholesale tax on vapor products, “including e-cigarettes, cartridges and [e-liquid] containing nicotine.”

Opposition to the legislation – including the Consumer Advocates for Smoker Free Alternatives Association, a vaping advocacy group – argues the “95% tax on vapor sends the confusing and inaccurate message that vaping is just as hazardous as smoking.”

Similar legislation in other states has produced detrimental results. In its 2016 budget, the Commonwealth of Pennsylvania included a vaping tax on “40% of the purchase price of the wholesaler or manufacturer.”  Now, less than one year after it went into effect, Pennsylvania state legislators are attempting to reverse the tax. State Sen. Camera Bartolotta (R-Mononghela) introduced legislation to replace the 40 percent tax with a five-cents-per-milliliter tax on e-liquids. In a March 2017 news release, Sen. Bartolotta said the 40 percent tax “has already resulted in the closure of more than 100 small businesses and the loss of several hundred jobs in the industry.”

E-cigarettes have proven to be effective products for tobacco harm reduction. Dr. Brad Rodu, senior fellow for The Heartland Institute, has over 20 years of experience researching and educating the public about alternative nicotine delivery systems, including smokeless tobacco products, such as e-cigarettes. Rodu’s research on smokeless tobacco and e-cigarettes provides extensive proof these products effectively deliver nicotine without the harmful chemicals associated with combustible tobacco cigarettes.

Other scientific institutions have researched the role of e-cigarettes as a tobacco harm reduction product and have found similar results. A 2015 report by Public Health England concluded e-cigarettes are 95 percent less harmful than traditional tobacco cigarettes and “could help reduce smoking related disease, death and health inequalities.” In 2016, the Tobacco Advisory Group of the Royal College of Physicians published an updated report on the use of tobacco harm reduction products. The authors concluded, “In the interests of public health it is important to promote the use of e-cigarettes … as a substitute for smoking.”

E-cigarettes could also provide a positive impact on health care costs. J. Scott Moody, chief executive officer and chief economist at State Budget Solutions, examined the impact of cigarette smoking. He found, “The potential savings of e-cig adoption, and the resulting tobacco smoking cessation and harm reduction, could have been up to $48 billion [in 2012].”

Instead of significantly damaging small businesses with a draconian vaping tax, state lawmakers in the Grand Canyon State should embrace e-cigarettes and similar products, which can serve as important tobacco harm reduction products. Lawmakers should propose ways to promote alternatives to smoking, rather than ostracizing these products as if they are the same as tobacco cigarettes.


The following documents provide additional articles on e-cigarettes and tobacco harm reduction.

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.

Qualitative Study on E-cigarettes Shows More Evidence of Tobacco Harm Reduction
In this Research & Commentary, Heartland Institute Government Relations Coordinator Lindsey Stroud examines a study, published in The International Journal of Environmental Research and Public Health in June 2016, that provides additional evidence showing e-cigarettes and vaporized nicotine products (VNPs) are an effective tobacco harm-reduction tool.

Nicotine Without Smoke: Tobacco Harm Reduction
This report provides an update on the use of tobacco harm reduction strategies related to non-tobacco nicotine products, particularly e-cigarettes. The authors conclude for all the potential risks involved, harm reduction has significant potential to prevent death and disability caused by tobacco use and to hasten the nation’s progress toward a tobacco-free society. 

Research & Commentary: New CDC Report Finds Vaping Helps Smokers Quit
A report released by the Centers for Disease Control and Prevention (CDC) found only 0.4 percent of the people who had never smoked tobacco in a CDC study group are current vapers, which the report defines as using a vaping device either every day or some days. The CDC report, the first of its kind, estimates e-cigarette use among U.S. adults using a nationally representative household survey. The report finds only 3.4 percent of adults who have never smoked have tried an e-cigarette; 12.6 percent of Americans have tried an e-cigarette; and fewer than 4 percent of the U.S. population are regular e-cigarette users.

E-Cigarettes Are Making Tobacco Obsolete. So Why Ban Them?
Matt Ridley reports vaping works better than any other method of giving up smoking, and he examines several studies reaching this conclusion. Ridley asks why cities are banning vaping products given the large amount of evidence present showing their success in helping smokers quit. 

E-Cigarette Primer for State and Local Lawmakers
Joel Nitzkin provides evidence e-cigarettes work as a tobacco harm reduction modality and reviews the arguments against them. He closes with recommendations for actions state and local lawmakers should and should not consider regarding tobacco harm reduction and e-cigarettes. 

Research & Commentary: Electronic Cigarettes
Heartland Institute Senior Policy Analyst Matthew Glans examines electronic cigarettes, tobacco harm reduction, and various proposals to regulate e-cigarette use. E-cigarettes have become one of the most popular nicotine replacement products and a key building block in tobacco harm reduction strategies. 

Studies Show E-Cigarettes Help Smokers Quit
For years, advocates of smoke-free alternatives, such as electronic cigarettes and other e-vapor products, have known these products are effective at helping smokers quit or dramatically reduce their cigarette consumption. Gregory Conley examines several studies showing the value of vapor products in smoking cessation.


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, and PolicyBot, Heartland’s free online research database.


The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.