Research & Commentary: Kentucky Should Not Rely on Vaping Bills for Funding Woes

Published February 13, 2020

Kentucky lawmakers recently introduced legislation that would severely limit tobacco harm reduction options for adults. The two bills would require licenses for “enhanced vapor products,” and increase taxes on tobacco products, as well as applying the tobacco tax to vapor products.

House Bill 69 defines “enhanced vapor products” as vaping devices that contain flavorings and/or have a nicotine content of “four percent” or greater. Enhanced vapor products include reusable and disposable products as well as any type of device including open tank mod-styles and cartridge-based systems. Retailers of enhanced vapor products would be required to maintain annual licenses. Moreover, these products would be sold exclusively in age-restricted stores, and all sales must be in-person, essentially banning all other sales, including online, catalog, and phone sales.  

House Bill 32 would apply the tobacco tax to vapor products and increase the excise tax from 15 percent to 27.5 percent of the wholesale price. The legislation also eliminates previous legislation that recognized tobacco harm reduction. HB 32 omits taxing tobacco products based on their “relative risk,” and would not recognize a reduced tax on products that have received a modified risk tobacco product application from the U.S. Food and Drug Administration.

Although the sponsor of both bills claims this legislation will address youth vaping, overregulation and excessive taxation on vapor products reduces adult access to tobacco harm reduction products.

According to the 2019 Kentucky High School Youth Risk Behavior Survey, Kentucky does not have an epidemic of youth using e-cigarettes. In 2019, 73.9 percent of Kentucky high school students reported not using a vapor product in the 30 days prior to the survey. Only 8.7 percent reported daily e-cigarette use.

Further, the role of flavors being the reason youth use vapor products is overblown and false. The Heartland Institute recently analyzed several statewide youth vaping surveys to understand the role of flavors in youth e-cigarette use. In an analysis of five states, only 15.6 percent of high school students cited using e-cigarettes because of flavors. Overwhelmingly, youth are using vapor products because a friend and/or family member had used them.

Despite recent fearmongering, e-cigarettes and vapor products are significantly less harmful than combustible cigarettes. Numerous public health organizations, including Public Health EnglandRoyal College of Physicians, National Academies of Sciences, Engineering, and Medicine, American Cancer Society (ACS), and U.S. Food and Drug Administration (FDA) have acknowledged there is a reduced harm associated with e-cigarettes and vaping devices, compared to traditional tobacco products. ACS notes that e-cigarettes comprise a reduced risk primarily because they “do not contain or burn tobacco.”

Taxing these products at the same rate as combustible cigarettes is a disservice to public health. In fact, rather than taxing tobacco harm reduction products, lawmakers should note their use reduces current costs. For example, one analysis estimated Medicaid savings could have amounted to $48 billion in 2012 if e-cigarettes had been adopted in place of combustible cigarettes by all Medicaid recipients who currently consume cigarettes. A 2017 study found Medicaid savings “will be approximately $2.8 billion per 1 percent of enrollees,” over the next 25 years if 1 percent of Medicaid recipients switched from combustible cigarettes to e-cigarettes.

Finally, Kentucky lawmakers should rely on existing tobacco funding for programs that can reduce youth e-cigarette use and help adults quit smoking. For example, in 2019, Kentucky received an estimated $507.3 million in tobacco taxes and tobacco settlement payments. In the same year, the commonwealth spent only $3.8 million, or 0.07 percent, on tobacco control programs, including education and prevention. Further, Kentucky invests a dismal $0.65 per smoker in the state’s quit line, significantly less than the national average of $2.21 per smoker.

Although HB 69 does not ban the sale of vapor products, it significantly reduces adult access to such products and will forbid sales of proven tobacco harm reduction products in the same retail locations that offer combustible cigarettes. Moreover, tobacco harm reduction products, as a reduced harm product, should never be subject to the same taxation as combustible cigarettes. Rather than limit access and impose draconian taxes on vapor products, Kentucky lawmakers should reform how they spend existing tobacco moneys and reallocate adequate funding to tobacco control programs.

The following documents provide more information on e-cigarettes and tobacco harm reduction.

Policy Tip Sheet: Tobacco Harm Reduction 101: Kentucky
Heartland State Government Relations Manager Lindsey Stroud provides an analysis of the vaping industry in Kentucky, including economic data, state health department findings on vaping-related lung illnesses, youth e-cigarette use, tobacco retail compliance checks, and state funding dedicated to tobacco control programs.

Tobacco Harm Reduction 101: A Guidebook for Policymakers
This booklet from The Heartland Institute aims to inform key stakeholders on the much-needed information on the benefits of electronic cigarettes and vaping devices. Tobacco Harm Reduction 101details the history of e-cigarettes, including regulatory actions on these products. The booklet also explains the role of nicotine, addresses tax policy and debunks many of the myths associated with e-cigarettes, including assertions about “popcorn lung,” formaldehyde, and the so-called youth vaping epidemic.

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.

Research & Commentary: Vaping Taxes and Bans Hurt Smokers Trying to Quit–commentary-vaping-taxes-and-bans-hurt-smokers-trying-to-quit
In this Research & Commentary, Heartland Institute Senior Policy Analyst Matthew Glans and State Government Relations Manager Lindsey Stroud examine vaping bans and taxes and consider how such measures block or limit what is for many smokers an effective method for halting the use of tobacco cigarettes.

Research & Commentary: Qualitative Study on E-cigarettes Shows More Evidence of Tobacco Harm Reduction
In this Research & Commentary, Heartland Institute State Government Relations Manager 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 are an effective tobacco harm-reduction tool.

Podcast Series: Voices of Vapers
In this weekly podcast series, State Government Relations Manager Lindsey Stroud talks with researchers, advocates, and policymakers about tobacco harm reduction and electronic cigarettes. The series provides important information about the thousands of entrepreneurs who have started small businesses thanks to THR and the millions of adults that have used electronic cigarettes and vaping devices to quit smoking tobacco cigarettes.


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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