Opinion

How to Beat the Tobacco Smoking Epidemic: Set E-Cigarette and Snus Taxes Significantly Lower Than Combustible Tobacco Taxes

“Follow the science” is a rallying cry in the nationwide fight against the coronavirus. As health economists dedicated to generating scientific data and translating it into sound policymaking, we could not agree more. What worries us is that this same approach appears to be cast aside in our battle against another epidemic: cigarette smoking.

Each year close to half a million Americans die from smoking-related causes, which is comparable to the current coronavirus death toll. Non-combustible tobacco products like e-cigarettes and snus have emerged as less harmful nicotine alternatives with the potential to be more effective than traditional nicotine-replacement therapies (e.g., nicotine gum) in helping smokers quit.  But concerns over underage vaping have driven a wave of restrictive regulations that reduce e-cigarette appeal and threaten to reduce the rate of smoking decline.  Nowhere is this sentiment more apparent than in several states which tax e-cigarettes and snus at the same level as cigarettes, thereby implicitly treating the products as equally harmful when they are not. More recently, “tax parity” regardless of tobacco product risk has been proposed federally in the Tobacco Tax Equity Act of 2021, which was introduced in April by Sens. Dick Durbin (D-Ill.) and Ron Wyden (D-Ore.).

E-cigarettes have been available in the U.S. marketplace for over a decade, and we have gained substantial insight on their health risks. A National Academies of Sciences, Engineering, and Medicine report puts forth a science-based argument contending that while e-cigarettes are not without risk, they are likely to be far less harmful than cigarettes. Despite a common misconception among both individuals and health care professionalsnicotine on its own is not carcinogenic. High-nicotine exposures have been found to harm the developing brain of rodents, but this harm has not been documented in human brains, nor has the harmful effect been compared to other substances such as caffeine, alcohol, or marijuana. A recent Cochrane systematic review found that e-cigarettes are more effective than nicotine replacement therapy in helping adults to quit smoking.

Despite their potential for harm reduction, e-cigarettes have been met with significant skepticism. In part, this wariness is driven by the substantial and worrying increase in underage e-cigarette use. Fortunately, concerns about e-cigarettes acting as a “gateway” to cigarettes have not materialized and youth cigarette smoking is at a historically low level. In 2009, 19.5 percent of youth smoked cigarettes and a Healthy People 2020 goal of a 16 percent youth cigarette use rate was announced by government scientists and public health officials. By 2019, youth cigarette use was at 6 percent, thus overwhelmingly surpassing the 2020 goal by more than 350 percent, likely in large part due to e-cigarettes.

Snus meanwhile is widely used in Sweden and cancer rates are substantially lower than in the United States. One brand of Swedish snus has received approval from the Food and Drug Administration through the modified-risk tobacco product pathway to advertise their products as providing a “lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.”

Scientific evidence supports the idea that e-cigarettes and snus provide immediate benefits as harm-reduction products. Adult smokers now have access to much more effective smoking-cessation products than ever before. We should be celebrating this access and doing more to encourage smokers to switch to e-cigarettes and snus, while continuing targeted approaches to reduce underage access to all tobacco products.

Taxing tobacco products based on their relative risk is one approach to incentivizing harm reduction. In such a framework, combustible tobacco (the products with the highest risk) would be more heavily taxed than lower risk products such as e-cigarettes and snus. Our National Institutes of Health-funded research spanning multiple peer-reviewed published papers on e-cigarettes, and complementary work from other researchers, shows that across an array of analytic approaches, e-cigarettes function as what economists call “substitutes” for cigarettes. In practical terms, if e-cigarettes and cigarettes are substitutes, some individuals will shift between using one product or the other depending upon the price environment. Given that e-cigarettes and cigarettes are substitutes, an unintended but inevitable effect of increasing taxes on e-cigarettes is to increase cigarette use. This shift to cigarettes will likely significantly increase overall tobacco-related death and disease and be a tragic public health outcome.

Policymakers should incentivize rather than impede people’s desire to use less risky products. An appropriate tax structure is to tax tobacco products according to risk; therefore, taxing e-cigarettes and snus substantially lower than combustible tobacco. Such a differential risk tax policy is consistent with science — and will help us end the tobacco smoking epidemic.

 

Michael F. Pesko, Ph.D., is a health economist and an associate professor in the Department of Economics at Georgia State University.

Johanna Catherine Maclean, Ph.D., is a health economist and an associate professor in the Department of Economics at Temple University and the National Bureau of Economic Research.

Charles Courtemanche, Ph.D., is a health economist and an associate professor in the Department of Economics at the University of Kentucky and the NBER.

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