Hawaii Legislation Highlights How E-Cigarette Taxes Are Anything But Productive


Last week, Hawaii's state legislature introduced two bills that would ban the sale of e-cigarettes to minors and tax the devices at 70% of their wholesale price, the same rate as tobacco products. Like similar state proposals designed to regulate the smoking alternatives, Hawaii's effort is well-intentioned but misguided. The state's proposal is based on bad science and creates several unintended consequences.

If you are unfamiliar, e-cigarettes (or "e-cigs") mimic traditional cigarettes in almost every way, but lack most of the harmful chemicals found in tobacco. That's where the first problem with the legislation arises. Proponents of the proposal in Hawaii say that e-cigs contain high levels of potentially harmful substances and "...there is very little known about the long term health effects of the use of electronic cigarettes or the vapors given off." But the available evidence counters such assertions. As I have discussed previously on PolicyMic, the first clinical trial that tested e-cigs found that they could "... help smokers to remain abstinent or reduce their cigarette consumption...without causing significant side effects...” The Food and Drug Administration (FDA) also concluded two years ago that e-cigs contain far fewer carcinogens than traditional cigarettes. Boston University public health professor Michael Siegel also highlighted the problem with the legislation's justification, explaining that "the anti-smoking ideologues would advise victims of a shipwreck not to use the lifeboats because they haven't been fully tested to ensure their safety. And if thousands of victims of that shipwreck were successfully keeping afloat because of the lifeboats, the anti-smoking ideologues would advise them to abandon the lifeboats and stick to 'government approved' survival methods." 

The tortured logic doesn't stop there, however. Given that smoking kills over 400,000 people annually, as proponents of the Hawaii legislation admit, their fear that e-cigs could be harmful is entirely misplaced. Tobacco is clearly the real killer here. The bills' proponents are doubly wrong on this point because they attempt to associate the risks of tobacco use with e-cigs, which do not contain tobacco. They also claim that e-cigs could serve as a "gateway" to the use of other more dangerous tobacco products, even though the overwhelming effect of e-cigs has been to reduce tobacco use. 

Hawaii's proposal to classify and tax e-cigs as tobacco products will also create some dangerous unintended consequences. Much research suggests that taxing tobacco raises its price and discourages its consumption. In this case, however, the state would be discouraging consumption of one of tobacco's safer competitors. This is very troubling because lower prices relative to cigarettes provide an incentive for smokers to switch to e-cigs. Worse, the impact won't be restricted to the islands. One of the major suppliers of e-cigs, a company called Volcano, is based in Hawaii. As a result of the tax, retailers around the country supplied by Volcano would be forced to raise their prices -- or stop selling e-cigs altogether. The result, then, would be even fewer smokers giving up traditional cigarettes.

But the pending legislation hurts the cause of public health in other ways as well. With smokers incentivized to stick to traditional cigarettes, everybody else gets to endure more secondhand smoke, and continue covering the health care costs associated with smoking. Both are externalities that public health advocates have pointed to for many years in their fight against the tobacco industry. These spillover effects could be avoided by embracing smoking alternatives like e-cigs. But as it stands, states like Hawaii are blocking solutions to important health problems just like cigarette manufacturers did for so long.  

After good science, the second casualty in these sorts of debates is usually individual freedom. While there is certainly a case to be made for restricting liberty when a person's actions threaten the health and safety of others, we have just the opposite in this case: state governments restricting choice in spite of the impacts on public health and safety. If for no other reason, this is enough to push back against the several states that have taken aim at e-cigs. 

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