Taxing Vapes Undermines Public Health and Personal Freedom

New legislation in Iowa proposes a ten percent tax on the wholesale price of vapor and nicotine products. Excise taxes like the one suggested in the Hawkeye State are regressive and tend to disproportionately impact low-income earners. If the goal is to reduce smoking and save lives, then regressive taxes on tobacco harm reduction (THR) products like vapes is the wrong approach. With approximately 12.9 percent to 14.7 percent of Iowa adults currently smoking, encouraging smoking cessation is critical, and heavy-handed government taxes will only make matters worse.

A traditional cigarette has more than 6,000 ingredients and releases over 7,000 chemicals when burned, causing nearly 5,100 deaths per year in Iowa. Smoking is linked to many diseases, strains healthcare, and costs Iowan taxpayers approximately $1.28 billion annually in smoking-related healthcare costs and roughly $1.21 billion to $3.1 billion in lost productivity.

The differences between cigarettes and THR products are immense. The latter don’t contain all of the added chemicals—with the significant associated health pitfalls. The similarity is that both products contain nicotine. However, nicotine is not what causes cancer, it’s the 6,000 ingredients and 7,000 chemicals found in traditional cigarettes. Rather than requiring people to quit nicotine cold turkey, which has historically failed, THR focuses on lowering the risk to consumers.

The use of THR products is working to wean smokers off cigarettes. According to the Centers for Disease Control and Prevention (CDC) data and analysis, cigarette smoking among U.S. adults has experienced a significant and long-term decline. Between 2005 and 2021, the prevalence of adult smoking plummeted from 20.9 percent to 11.5 percent. A March 2023 CDC report found that, in 2021, 40.3 percent of adult e-cigarette users had previously smoked cigarettes.

THR products are an effective tool that have helped adult smokers quit the habit, yet legislators seeking to boost state budgets and compensate for shortfalls, as well as offset declining tobacco revenues, often overlook this benefit for a quick and fleeting money grab.

The most troubling aspect of taxing THR products is that the most vulnerable consumers trying to quit smoking are the ones who are negatively impacted, even though they should be the ones benefiting from THR products.

High tax rates on these reduced-risk alternatives in states such as Iowa boost black market activity by creating significant price disparities across state lines, leading consumers to seek out cheaper, untaxed, and often counterfeit products, often from China. This shift not only undermines state revenues but also exposes consumers to unsafe and unregulated products that pose health risks, while also fueling illegal smuggling and counterfeit markets.

Displayed on the Iowa flag is the state motto: “Our liberties we prize and our rights we will maintain.” It is vital that policymakers in the Hawkeye state respect consumer choice and remember whom they represent. Providing access to less harmful tobacco products is a far better alternative to imposing excessive regulations, high taxes, or outright bans that infringe on personal freedom.

Free markets and transparent information about less harmful options allow innovation and competition to develop better products that meet consumers’ needs. Lawmakers can save smokers’ lives by rejecting this misguided tax proposal.