Vaping and combustible cigarettes are substitutes

Late last year I pointed out that the so-called gateway from vaping to combustible cigarettes was based on dodgy statistics. Nonetheless the Australian government remains committed to vaping being outlawed – or only available under prescription.

In the meantime the war on combustible cigarettes has become bogged down.

The anti-vaping attitude of the Australian government is leading to adverse health outcomes and probably costing lives too.

In June 2020 an issue of the Journal of Risk and Uncertainty (ranked A* by the Australian Business Dean’s Council and Q1 by Scimago) published two very interesting papers.

These two papers examine the impact of tobacco tax increases on the consumption of combustible cigarettes and also on the consumption of e-cigarettes (vaping). They also look at the effect of introducing (or increasing) taxes on vaping fluid.

Both papers report an interesting and important result:

Estimates suggest that the e-cigarette tax increased adult smoking and reduced smoking cessation in Minnesota, … (Saffer et.al 2020)

and

… we find evidence that higher traditional cigarette tax rates reduce adult traditional cigarette use and increase adult e-cigarette use. Similarly, we find that higher e-cigarette tax rates increase traditional cigarette use and reduce e-cigarette use. Cross-tax effects imply that the products are economic substitutes. (Pesko et.al 2020)

Consumers who are dissuaded from using vapes end up smoking combustible cigarettes. Now as much the anti-Tobacco lobby state that smokers should simply quit, we know that is not going to happen.

So what is the bottom line?

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. (Pesko et.al 2020)

If the Minnesota tax was replicated across the US:

If this tax were imposed on a national level about 1.8 million smokers would be deterred from quitting in a ten year period. The taxation of e-cigarettes at the same rate as cigarettes could deter more than 2.75 million smokers nationally from quitting in the same period. (Saffer et.al 2020)

If taxation has such a huge impact leading to premature death and unnecessary health costs, just imagine what prohibition is doing.

The results are actually worse for ‘public health’ officials and their lick spittle political masters.

From Pesko et.al (2020):

A $1.00 traditional cigarette excise tax increase increases current vaping by 0.3 ppts (p > 0.10), or 7.4%, and everyday vaping by 0.2 ppts (p < 0.05), or 14.2%, suggesting that the two products are economic substitutes. Traditional cigarette taxes also increase dual use of both tobacco products by 0.3 ppts (p < 0.05), or 17.2%, and any use of either product by 0.2 ppts (p > 0.10), or 1.3%. These results suggest that smokers use ecigarettes when traditional cigarette taxes rise, either to continue to consume some portion of their regular nicotine at a lower relative price or as a means to quit smoking.

We find that a $1.00 increase in tax per fluid ml of vaping liquid increases daily smoking propensity by 0.6 ppts (p < 0.05) or 5.3%. A $1.00 increase in tax per fluid ml of vaping liquid reduces the probability of current vaping by 0.5 ppts (p < 0.10) or 15.3% and the probability of daily vaping by 0.2 ppts (p > 0.10) or 14.2%. Finally, we observe that a $1.00 increase in tax per fluid ml of vaping liquid reduces the probability of dual use by 0.4 ppts (p < 0.10), or 24.4%. Collectively, these findings further suggest that traditional cigarettes and e-cigarettes are economic substitutes. Ecigarette taxes may reduce dual use rates by discouraging adult smokers from trying to use e-cigarettes to quit.

Australia has the highest tobacco excise in the world. This should be leading to a massive substitution away from combustible tobacco products to less harmful products. Instead it is leading to people buying their smokes on the black market. Not only is the Australian government pursuing policies that makes it difficult for smokers to make better choices, it is making them criminals too.

The Australian government would rather see people die than lose tobacco excise revenue.

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13 Responses to Vaping and combustible cigarettes are substitutes

  1. pbw says:

    From the linked Brisbane Times article.

    But Simon Chapman, respected tobacco control activist and health academic, said claims of a booming black market were overblown.

    (My emphasis.)

  2. Bruce of Newcastle says:

    I was amused by the Californian and Canadian experience when they legalized weed.

    The government shops all went bankrupt. They were out-competed by the black market, since the tax levied was so high and the dealers so efficient.

    Government can’t even sell a weed and make money.

  3. wal1957 says:

    I don’t know about the ‘black market’ cigarettes but I do know that ‘chop chop’ is widely used nowadays.
    Border closures have made it harder to get but it is still available.

  4. Some History says:

    So you still believe that the robber politicians believe the “smoking death” statistics?

    … it is making them criminals too.

    Look at the “white supremacist” crap. Ordinary folk turned into criminals. We’re all smokers now.

  5. Bruce says:

    Anyone have the REAL figures on the total excise AND taxes on tobacco products?

    i was told some years ago thayt it was WAY in excess of the National health budget at the time.

    Then there is booze…….

    Follow the “spillage”.

  6. Albatross says:

    They.don’t.care.

  7. a happy little debunker says:

    Anyone have the REAL figures on the total excise AND taxes on tobacco products?

    From Sept 1st 2020 excise = 1.10 per cigarette, that is $22 per pack (of 20)

    Cheapest packet I can buy (Woolies) is $27.50.
    Less GST = 27.50 – 2.75 = $24.75
    Less government excise = 24.75-22.00 = $2.75

    Meaning that the actual cost of the cheapest cigarettes is only 10% of the paid price.

  8. Angus Black says:

    Out of interest, do we know that vaping is less injurious than combustible cigarettes?

    I ask because, suspicious as I am, I can see (analogous to the 20th century tobacco industry) that all the big players gain from research showing that it is indeed less injurious.

    The processes of science – and academic research generally, I’m sad to say – has been corrupted and sold itself often enough for the proverbial 30 pieces of silver (or just 15 minutes on the tele)

  9. Some History says:

    … the robber politicians

    They’re crooks – both Lab/Lib – running a racket.

  10. John Bayley says:

    Border closures have made it harder to get but it is still available.

    Yeah, and so it meth (ice).
    Apparently there’s plenty of it around, even in this regional town.
    The government is working on it though.
    Any day now, the war on drugs will be a success.
    At about the same time there are no more smokers. /s

  11. Muz says:

    Snus products shipped from Sweden, discreet and harmless, every time I log on to order the site tells me that the last order from Australia was “4 minutes ago” or “three hours ago”. Haven’t purchased cigarettes for two years now.
    Traditional tobacco-based snus pouches are there, but check out nico only. No duty (yet). “Slim and strong”, I like it.

  12. Albatross says:

    You know, the way argument has proceeded, I get a sense of the Utilitarian argument:

    Mill: “But baby, it will lead to the greatest happiness. MY happiness.”
    Your bum: “But Mill. It seems like this denies me the sovereignty of my sphincter.”
    Mill: “Relax baby. It’s for the greater good.”
    Your bum: “I still don’t want to be sodomised.”
    Mill: “But you see: you have no choice.”

  13. Baa Humbug says:

    If it’s taxed, then the Laffer Curve applies.
    In the case of tobacco, call it the Marlboro Curve.

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