Research & Commentary: Utah’s Proposed E-Cigarette Tax Will Snuff Out Harm Reduction

Published February 19, 2019

Lawmakers in Utah have introduced legislation that would apply an 86.5 percent tax on e-cigarettes and vaping products. The legislation’s author intends to put “the price point up” to make it difficult for youth to purchase e-cigarettes. While addressing youth e-cigarette use is commendable, the draconian tax that would be placed on tobacco harm reduction (THR) products would threaten the public health gains e-cigarettes provide and hurt small businesses. Moreover, less than 10 percent of the funds that would be generated by the proposed tax would go toward tobacco prevention and education, as more than 90 percent of the expected revenue is earmarked to the state’s General Fund.

Electronic cigarettes and vaping devices are considered THR products. Electronic cigarettes heat a solution of water, nicotine, propylene glycol, vegetable glycerin, and a flavoring to produce a vapor that is less harmful than the smoke produced by the 7,000 chemicals contained in combustible cigarettes.

Numerous public health groups have determined e-cigarettes are much less harmful than combustible tobacco products. In 2018, the American Cancer Society noted, “the exclusive use of e-cigarettes is preferable to continuing to smoke combustible cigarettes.” The same year, the National Academies of Sciences, Engineering, and Medicine determined switching from combustible cigarettes to e-cigarettes “results in reduced short-term adverse health outcomes in several organ systems.”

These are consistent with findings from public health organizations in the United Kingdom. Public Health England (PHE) and the Royal College of Physicians have found e-cigarettes are 95 percent less harmful than combustible cigarettes. In December 2018, PHE maintained “that vaping is 95% less harmful than tobacco,” and the U.K. government launched a “new campaign to try to convince the UK’s smokers that vaping is not as harmful as smoking and a good way to quit.”

Moreover, the reduced harms resulting from the use of e-cigarettes is helpful to state budgets and lawmakers, who continuously grapple with the health costs associated with combustible cigarettes. An analysis that estimated the potential benefits that would occur if all current Medicaid recipients who use combustible tobacco were to switch to e-cigarettes found that Medicaid savings could have amounted to $48 billion in 2012. A smaller study found Medicaid savings “would be approximately $2.8 billion per 1 percent of [Medicaid] enrollees” over the next 25 years.

Additionally, the proposed legislation would negatively impact Utah’s 263 vape shops. After Pennsylvania passed a 40 percent wholesale tax on e-cigarettes in 2016, an estimated 120 vape shops closed. It is estimated that vape shops “generate annual non-online sales of more than $300,00 per store” and average $26,000 in monthly sales. The proposed legislation would likely drive current and new vapers to turn to internet-based distributors. E-cigarette online sales grew 41.3 percent from 2016 to 2017, from $345 million to $487.7 million. 

While the legislation is aimed at addressing youth vaping, it fails to recognize the wealth of data on youth purchases that show youth vaping is not a significant problem. According to data from the U.S. Food and Drug Administration, compliance checks in Utah from 2016 and 2017 show in 2,630 compliance checks, only 115 businesses were in violation of selling a tobacco product to a minor, and the majority of those businesses are convenience stores, not vape shops.

Policymakers should also know the e-cigarette industry overwhelmingly supports preventing youth e-cigarette use. The Smoke Free Alternatives Trade Association provides “Age to Vape” signage to vape shops endorsing local laws. The Consumers for Smoke-Free Alternatives Association “supports laws that prohibit underage sales and encourages strict enforcement of laws” that ban access to e-cigarettes to minors. The Vapor Technology Association, which represents vaping manufacturers, requires members to “refrain from knowingly marketing Vapor Products to Minors,” which is strictly prohibited.

Rather than imposing a massive tax that would essentially eradicate THR in Utah, lawmakers should promote the use of these products and dedicate more funds toward preventing youth e-cigarette use. Further, revenues generated by taxes imposed on THR products should never be dedicated to a state’s general fund and should always be earmarked for tobacco cessation and prevention.

The following documents provide more information about tobacco harm reduction.

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 THRs and the millions of adults that have used electronic cigarettes and vaping devices to quit smoking tobacco cigarettes.

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 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.

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: 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.

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.

E-Cigarette Primer for State and Local Lawmakers
Dr. Joel Nitzkin, a senior fellow in tobacco policy for the R Street Institute, 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 Lennie Jarratt, a state government relations manager at Heartland, at [email protected] or 312/377-4000.