Last February, State Rep. Jerry Miller, R-Louisville, presented an amendment on his House Bill 32, agreeing to lower tax increases equating to a lower revenue gain for the state budget than the $94 million promised by the original version. Ben Chandler, president of the Foundation for a Healthy Kentucky, thinks that tax increases are a step in the right direction as it discourages teens to purchase the products. “A significant tax bump reduces consumption,” he said.
Going into effect this week, the new excise tax on vaping products will increase prices for cartridge-based e-cigarettes by $1.50 per pod, and containers of refillable e-cigarette liquid will be taxed at 15% of the wholesale price.
Bonnie Hackbarth, lead staff member with the Coalition for a Smoke-Free Tomorrow said that research has shown that increasing the price of nicotine products, deters people from using them. “Before the Food and Drug Administration’s partial ban on flavored e-cigarettes even began,” said Hackbarth, “companies had already introduced products that took advantage of one of the loopholes, and that’s disposable e-cigarettes. And this tax will apply to those as well.”
Higher taxes tend to lead to increased smoking rates
Meanwhile, a study conducted in Minnesota earlier this year, had found that increasing taxes on vaping products tends to lead to increased smoking rates. Analyzing the situation in Minnesota, where a harsh 95% tax has been imposed on vaping products, researchers from the National Bureau Of Economic Research (NBER) have found that the tax has increased adult smoking and reduced smoking cessation across the state.
The compiled estimates suggested that in line with arguments by countless public health experts, the high tax was directly linked to higher smoking rates and lower smoking cessation rates. “..the e-cigarette tax increased adult smoking and reduced smoking cessation in Minnesota, relative to the control group, and imply a cross elasticity of current smoking participation with respect to e-cigarette prices of 0.13.”
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