IEA - A tax on e-cigarettes is a tax on smoking cessation

From: Think Tanks
Published: Wed Feb 28 2024

Christopher Snowdon, Head of Lifestyle Economics at the free market think tank, the Institute of Economic Affairs Comments on reports that the Chancellor is considering a tax on e-cigarette liquid in the upcoming budget

“The government's approach to vaping has become an incoherent mess. It says it wants to clamp down on disposable vapes and yet it is going to tax refillable e-cigarette liquid. It is giving away e-cigarettes for free with its Swap to Stop scheme while making vaping less affordable for those who are prepared to pay. It says it wants to lower the tax burden but seems happy to tax smoking cessation.

“We know what happens when e-cigarettes are taxed. The evidence from other countries shows that it leads to more cigarette sales and more smoking.* When you have two substitute products, discouraging the use of one amounts to encouraging the use of the other. Anti-vaping policies are essentially pro-smoking policies.”

Notes to Editors

  • *Cotti et al. (2020) studied e-cigarette taxes in eight US states and found that a decline in e-cigarette pod sales led to an increase in the sale of traditional cigarettes.

  • Pesko et al. (2020) found that “higher e-cigarette tax rates increase traditional cigarette use” and predicted that an e-cigarette tax of US$1.65 per ml would increase the number of daily smokers by 1%.

  • Saffer et al. (2019) concluded that a large tax on e-cigarettes in Minnesota prevented 32,400 smokers from quitting.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.

Company: Think Tanks

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