The Volokh Conspiracy

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Tax Buried in the "Build Back Better" Bill Is Likely to Increase Smoking Rates

Whatever else the BBB bill will do, this provision is bad for public health and could increase smoking's death toll.


One of the provisions of the "Build Back Better" bill imposes a tax on non-combustible nicotine products (e.g. pouches and e-cigarettes). As Kenneth Warner, Dean emeritus of the University of Michigan's School of Public Health, explains in a Washington Post op-ed, this is bad for public health because it will lead to more smoking.

The tax on e-cigarettes is undoubtedly well-intentioned. Legislators rightly share the public's concerns about widespread youth vaping and about some manufactures' despicable marketing of e-cigarettes to children. By substantially raising the price of e-cigarettes — by about 25 percent, for a typical user — the tax will certainly discourage youths from using these products. That benefit comes at a steep public health cost, however: The tax will increase cigarette smoking among adults — and quite possibly teenagers, too. And any increase in smoking, which kills about 480,000 Americans annually, will lead to higher rates of disease and death in this country.

The problem with the tax is simple. Economic studies demonstrate that cigarettes and e-cigarettes are substitutes for each other. If cigarettes become more costly relative to e-cigarettes, some cigarette smokers will switch to e-cigarettes. Conversely, if e-cigarette prices rise relative to cigarette prices — as they will under the legislation's tax provision — some people will smoke cigarettes who would otherwise have used e-cigarettes.

As Warner notes (and I have highlighted in prior blog posts) this is not a theoretical prediction. There are now multiple peer-reviewed academic studies showing the substitution effect, even for youth.

Warner identifies three groups likely to be affected by the tax increase should it become law:

The individuals at risk fall into three groups: First, a subset of former smokers who quit smoking with e-cigarettes — hopefully a small subset — will gravitate back to smoking cigarettes, because the price of their substitute will have increased significantly. Second, some dual users (the sizable group of people who smoke and vape) will stop vaping and switch to exclusive cigarette use. Many dual users are in a transition phase away from smoking; the tax makes it less likely that transition will happen. And third, this tax will deter current smokers who might have tried vaping and transitioned away from cigarettes from doing so.

I would identify a fourth group: People (often youth) who want to try or experiment with nicotine products, who will now have a greater incentive to try combustible cigarettes instead of e-cigarettes or other, non-combustible (and substantially less dangerous) alternatives. If anything, Warner is understating the harm this tax increase could cause, as it could increase the portion of youth who experiment with (and eventually become regular users of) combustible cigarettes.

More from Warner:

Unfortunately, surveys show that a high proportion of the public — about half — wrongly believe that e-cigarettes are as dangerous as, or even more dangerous than, cigarettes. That perception is shared by smokers, and it discourages many from trying e-cigarettes. The current price differential, favoring e-cigarettes, serves as one significant incentive to encourage smokers to try vaping, but the new legislation's tax provision would diminish that incentive considerably.

The fear-mongering of anti-nicotine groups and government agencies (including the Surgeon General and the CDC) has convinced many Americans that electronic cigarettes are equally or more dangerous than combustible cigarettes. This is wrong, and such messaging is bad for public health.

Warner concludes:

One out of every seven American adults is a smoker today. Half of lifelong smokers die as a result, losing on average 20 years of life expectancy. Quitting smoking, even later in life, cuts that loss significantly. Making e-cigarettes more expensive increases the odds that smokers will cling to their deadly behavior, which is the opposite of sound public policy.

Indeed. This provision of the BBB bill is so bad, it will kill people.