Research & Commentary: New Jersey’s Draconian Tax on Vaping Ignores Public Health Gains Created by Tobacco Harm Reduction Products

Published February 23, 2018

Legislators in New Jersey are examining a proposal to place a tax on vaping products and require licenses for retailers of vaping shops. The proposed legislation intends to impose a 75 percent tax on the “receipt from every sale, use or distribution of an electronic cigarette by a distributor or a wholesaler to a retail dealer or consumer.” Such draconian legislation will generate a negative impact on public health in the Garden State while hindering the economic gains vaping products provide.

Opponents of taxes on e-cigarettes and vaping devices, also called tobacco harm reduction (THR) products, argue they are counterproductive and offset some of the public health gains these products provide. These claims are supported by the available research, which shows e-cigarettes and vaping products are significantly less harmful than tobacco cigarettes.

In 2018, the National Academies of Sciences, Engineering, and Medicine concluded switching from combustible cigarettes to e-cigarettes “results in reduced short-term adverse health outcomes in several organ systems.” This finding is in line with earlier research findings.

In 2017, NHS Health Scotland issued a statement promoting the use of THR products, finding them “less harmful than smoking.” The Royal College of Physicians stated in 2016 the health hazards associated with THR products are “unlikely to exceed 5% of the harm [caused by] smoking.” In 2015, Public Health England acknowledged e-cigarettes to be an estimated “95% safer than smoking.”

Additionally, it has been suggested using THR products could provide important financial benefits to states. J. Scott Moody, chief executive officer and chief economist as State Budget Solutions, analyzed the impact of THR products on health care costs. Moody estimated Medicaid savings could have amounted to $48 billion in 2012 if e-cigarettes and vaping devices had been substituted by current Medicaid smokers.

Such an extreme tax will negatively impact the vaping industry in New Jersey. This has already occurred in neighboring Pennsylvania. The Keystone State passed a 40 percent wholesale tax on vaping products in 2016. Since the tax’s implementation, an estimated 120 vaping shops have shut down. Vape shops are a substantial part of the economy. Research indicates these businesses “generate an annual non-online sales of more than $300,000 per store” and average $26,000 in monthly sales. Higher taxes will cause stores in New Jersey to permanently close their doors, which means consumers of THR products will be forced to shop elsewhere, including online and out of state, for their vaping and e-cigarette needs.

Lawmakers in the Garden State should deter from onerous taxes on THR products, such as e-cigarettes and vaping devices. These products have proven to be a valuable alternative for millions of cigarette smokers and have helped offset health care costs while contributing to the state’s economy. Rather than limiting their potential through unnecessary and burdensome legislation, lawmakers should promote their use as tobacco cessation tools.


The following documents provide further information 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.

Research & Commentary: Study Finds ‘No Detectable Changes in Lung Health’ of E-Cigarette Users Who Have Never Smoked–commentary-study-finds-no-detectable-changes-in-lung-health-of-e-cigarette-users-who-have-never-smoked
In this Research & Commentary, Heartland Institute State Government Relations Manager Lindsey Stroud discusses a 2017 study that examined health outcome differences between tobacco cigarette smokers and electronic cigarette users. Stroud says researchers “found no significant changes in any of the health outcomes investigated” and urges policymakers to promote the use of such products instead of imposing burdensome taxes and regulations.

Research & Commentary: Study Finds E-Cigarettes Would Prevent 6.6 Million Premature Deaths–commentary-study-finds-e-cigarettes-would-prevent-66-million-premature-deaths
In this Research & Commentary, Heartland Institute State Government Relations Manager Lindsey Stroud examines an October 2017 Tobacco Control study that found electronic nicotine delivery systems (ENDS) might help extend life for millions of people. The authors of the study found there was an estimated 6.6 million fewer deaths and more than 86 million fewer-life-years lost over a ten year period because of ENDS products. Stroud concludes the use of ENDS could also help improve the budgets of numerous state programs, including Medicaid.

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: Public Health Officials Urge Use of Electronic Nicotine Delivery Systems
In this Research & Commentary, Heartland Institute State Government Relations Manager Lindsey Stroud notes the importance of NHS Health Scotland’s joint statement encouraging the use of electronic nicotine delivery systems (ENDS) as an alternative to tobacco products. NHS Health Scotland, Public Health England, and other groups have found ENDS are 95 percent less harmful than tobacco cigarettes.

Qualitative Study on E-cigarettes Shows More Evidence of Tobacco Harm Reduction
In this Research & Commentary, Heartland Institute State Government Relations Manger 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 aims to provide a fresh update on the use of harm reduction in tobacco smoking, in relation to all non-tobacco nicotine products but particularly e-cigarettes. It concludes that, for all the potential risks involved, harm reduction has huge potential to prevent death and disability from tobacco use, and to hasten our progress to a tobacco-free society. 

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. 



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.

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 government relations director, at [email protected] or 312/377-4000.