Objective: To use a standardised e-cigarette tax measure to examine the impact of e-cigarette taxes on the price and sales of e-cigarettes and cigarettes in the USA.
Design: We used State Line versions of NielsenIQ Retail Scanner data from quarter 4 of 2014 through quarter 4 of 2019 to calculate e-cigarette and cigarette prices and sales in 23 US states. We then estimated how these outcomes are associated with standardised state-level e-cigarette taxes, controlling for state fixed effects, quarter-by-year fixed effects, cigarette taxes, other tobacco control policies and other state-level time-varying characteristics.
Results: A real $1 increase in the e-cigarette standardised tax increases the price of 1 mL of e-liquid between $0.43 and $0.59 depending on specification. Controlling for fixed effects and cigarette taxes, a 10% increase in e-cigarette taxes is estimated to reduce e-cigarette sales by 0.5% and increase cigarette sales by 0.1%, though both results are attenuated and statistically insignificant in a model with full controls.
Conclusions: Our study finds that e-cigarette taxes increase e-cigarette retail prices by approximately half of the tax. Further, e-cigarette taxes are associated with reduced sales of e-cigarettes and increased sales of cigarettes in some specifications. Our estimates are sizably lower than from other studies using sales and survey data.
Keywords: Economics; Electronic nicotine delivery devices; Taxation.
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