A paper on e-cigarette taxation that ignores the impact on demand for cigarettes misses the main point
CLIVE BATES
I would like to make three comments by way of a brief post-publication review.
1. The impacts of vaping tax on smoking have been completely overlooked
For a study of e-cigarette taxation to have any public health relevance, it must consider the impact of e-cigarette prices on cigarette demand. Cigarettes and e-cigarettes are economic substitutes. The demand for one responds to changes in the price of the other, an idea well understood in economics and quantified through the concept of cross-elasticity. The paper appears to pay no regard to the impact of vaping taxes on cigarette demand, Yet such effects might easily overwhelm any benefits from reduced e-cigarette use – in fact, impact on demand for other tobacco products and the development of informal markets are by far the most important impacts of a vaping tax. By way of example, a 2020 paper by Pesko et al. [1] concluded:
Our results suggest that a proposed national e-cigarette tax of $1.65 per milliliter of vaping liquid would raise the proportion of adults who smoke cigarettes daily by approximately 1 percentage point, translating to 2.5 million extra adult daily smokers compared to the counterfactual of not having the tax.
Clive Bates – Tobacco Control – 2021-07-29.