Heavy E-cigarette Taxes increase Cigarette Sales: Study

Sep.27.2022
Heavy E-cigarette Taxes increase Cigarette Sales: Study
Heavy taxes on e-cigarettes lead to increased sales of traditional cigarettes, according to a new paper in the Journal of Health Economics.

A new paper in the Journal of Health Economics indicates that heavy taxes on e-cigarette products have led to an increase in the sales of traditional cigarettes.


The co-authors of this peer-reviewed article used NielsenIQ Retail Scanner Data (NRSD) from 2013 to 2019, which tracks weekly sales data from many national retailers including drugstores, grocery stores, dollar stores, club stores, and big box stores, where electronic cigarettes make up a significant portion of total sales. They found that e-cigarette taxes are almost fully passed onto consumers in the form of higher retail prices, meaning that e-cigarette users typically bear most of the tax burden. The authors calculated that for every $1 increase in e-cigarette taxes, e-cigarette prices increase by 90 cents. Therefore, policymakers have a significant impact on e-cigarette retail prices through tax legislation.


Our research has found that levying a tax on e-cigarettes has led to an increase of 1.9 packs of cigarette sales for every Juul-sized e-cigarette eliminated.


Electronic cigarettes are considered a commodity with elasticity of demand, meaning that changes in pricing can cause significant shifts in consumer demand. As a cheaper alternative to traditional cigarettes, proponents of tobacco harm reduction and public health economics argue that increasing prices of electronic cigarettes could deter both current and potential users, inadvertently driving them towards the cheapest source of nicotine: traditional cigarettes.


In 2021, federal legislation increased taxes on e-cigarettes in an attempt to match those on traditional cigarettes. Supporters and critics of reducing the harm of tobacco products viewed the move as illogical at best. If the goal is to encourage people to transition from cigarettes to safer alternatives, it would make sense to incentivize this behavior by making the safer products cheaper than the deadly ones.


As the author notes, between the end of the research period in December 2019 and June 2022, 13 states have implemented taxes on electronic cigarettes, bringing the total number of states taxing e-cigarette products to 30. Perhaps most notable is California Governor Gavin Newsom's approval of a 12.5% sales tax effective October 2021, bringing the tax rate on e-cigarettes in the state closer to the current tax rate on traditional cigarettes.


The author stated that "our research findings also revealed that cigarette taxes greatly reduced cigarette sales; therefore, if the goal is to put an end to cigarette usage, then increasing cigarette taxes is the way to achieve that goal.


Supporters of reducing tobacco harm are united in their opposition to taxing e-cigarettes. "Cigarettes are a more dangerous product, so taxing e-cigarettes seems to be a misplaced alternative," says Pesco.


Statement:


This article is compiled from third-party information and is intended solely for industry communication and learning.


This article does not represent the views of 2FIRSTS, and 2FIRSTS cannot verify the authenticity or accuracy of the article's content. The translation of this article is only for industry-related exchange and research purposes.


Due to limitations in translation skills, the translated article may not express the original text accurately. Please refer to the original article for accuracy.


2FIRSTS is completely aligned with the Chinese government on any domestic, Hong Kong, Macao, Taiwan, and foreign-related statements and positions.


The compiled information is the property of the original media and authors. If there is any infringement, please contact for deletion.



Disclaimer

This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.

Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.

This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

Copyright Notice

This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.

No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.

For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.

 

AI-Assisted Translation and Editing Notice

Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.

Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.

CBP and FDA Seize 18 Million Illegal Vapes Worth $175 Million in Maritime Cargo Operation
CBP and FDA Seize 18 Million Illegal Vapes Worth $175 Million in Maritime Cargo Operation
U.S. Customs and Border Protection (CBP) announced that more than 18 million illegal e-cigarettes valued at over $175 million were seized during “Operation Red Mist,” a joint enforcement initiative involving the U.S. Coast Guard and the FDA. The operation primarily targeted maritime vape shipments originating from China and focused on combating illicit importation, transportation, and distribution activities.
Regulations
May.14
Imperial Brands Launches 2ml+10ml blu MAX 6000 Vape System
Imperial Brands Launches 2ml+10ml blu MAX 6000 Vape System
mperial Brands has launched blu MAX 6000 in the UK, positioning the product as a higher-puff vape kit with longer-lasting use and replaceable pod+refill options. The device uses a 2ml+10ml click-on box format, with starter kits priced at £10.99 (approximately $14) and replacement pod+refill packs priced at £7.99 (approximately $10).
Market
May.19
French Vape Distributor Kumulus Vape Yields About 3% as Earnings Growth Stalls
French Vape Distributor Kumulus Vape Yields About 3% as Earnings Growth Stalls
Listed French vape distributor Kumulus Vape will trade ex-dividend on June 26, 2026, and pay an annual dividend of €0.10 per share on June 30, with Simply Wall St saying the payout is covered by profit and free cash flow, while weak earnings growth remains a concern.
Industry InsightMarketNews
Jun.24
PMI Partners With Italian Tenor Andrea Bocelli to Launch “Believe. Further” Platform
PMI Partners With Italian Tenor Andrea Bocelli to Launch “Believe. Further” Platform
Philip Morris International (PMI) and Italian tenor Andrea Bocelli have launched “Believe. Further,” a multi-year communications platform targeting cultural, institutional and business audiences in Europe, as PMI says smoke-free products accounted for 43% of its net revenues as of the first quarter of 2026.
Jul.01
 Product | ASDF Chroma extends retro cassette visual language with lighting-focused pod design
Product | ASDF Chroma extends retro cassette visual language with lighting-focused pod design
2Firsts noted that ASDF has displayed Chroma on its official website. Public information shows that Chroma is a closed-pod device equipped with an 800mAh battery, switchable RGB lights, haptic feedback and Normal/Boost power modes. It uses a 2ml OSTRO cartridge with 2% nicotine strength. Public information also shows that ASDF has a Malaysian brand background and has previously drawn industry attention for the “retro cassette” visual language used in its Vapetape series.
May.26
U.S. FDA: Youth E-Cigarette Prevention Campaign Prevented About 444,000 Initiations and Reduced Illegal Vape Sales
U.S. FDA: Youth E-Cigarette Prevention Campaign Prevented About 444,000 Initiations and Reduced Illegal Vape Sales
The U.S. Food and Drug Administration (FDA) said its youth e-cigarette prevention campaign, “The Real Cost,” prevented about 444,000 U.S. youth from starting e-cigarette use between 2023 and 2024 and blocked more than $42 million in unauthorized e-cigarette sales that would have been used by youth.
Market
Jun.25