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Abstract
Background E-cigarette products are the most popular tobacco/nicotine product used among youth and young adults in the USA. While emerging research has shown that e-cigarette taxes increase their price, no study to date has examined e-cigarette tax burdens nor their affordability for youth and young adults.
Methods Using real (2021 US dollars) prices per mL of e-liquid data from NielsenIQ and annual real (2021 US dollars) personal income data from Integrated Public Use Microdata Series, we calculate relative income prices and examine average annual percentage changes in affordability using Joinpoint trend analysis from 2015 to 2021. In addition, we use tax data to calculate e-cigarette tax burdens as a percentage of price per 1 mL of e-liquid.
Results In all states analysed, tax burdens increased from 2015 to 2021. E-cigarette prices decreased considerably from 2019 to 2021; in 2021 the real (2021 US dollars) average price of 1 mL of e-liquid was US$4.45. E-cigarettes on average became more affordable for all age groups and states; however, e-cigarettes tended to be less affordable in states with ad-valorem tax structures. On average, 16–17-year-olds needed 31% of their annual income to purchase 100 mL of e-liquid, whereas 18–19-year-olds, 20–24-year-olds and 25–34-year-olds needed 9%, 3% and 1%, respectively.
Conclusions E-cigarettes have become more affordable for young people, but less so in states with ad-valorem tax structures. Policy efforts should focus on reducing e-cigarette affordability, especially for youth, through tax-induced increases in e-cigarette prices to levels high enough to outpace income growth.
- price
- electronic nicotine delivery devices
- nicotine
- taxation
Data availability statement
Data are available upon reasonable request. Data may be obtained from a third party and are not publicly available.
This is an open access article distributed in accordance with the Creative Commons Attribution Non Commercial (CC BY-NC 4.0) license, which permits others to distribute, remix, adapt, build upon this work non-commercially, and license their derivative works on different terms, provided the original work is properly cited, appropriate credit is given, any changes made indicated, and the use is non-commercial. See: http://creativecommons.org/licenses/by-nc/4.0/.
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WHAT IS ALREADY KNOWN ON THIS TOPIC
National and international research have studied the affordability of cigarettes, beer and sugar-sweetened beverages. To our knowledge this is the first paper to calculate e-cigarette tax burdens and identify trends in e-cigarette affordability among youth and young adults in 23 states in the USA.
WHAT THIS STUDY ADDS
No study to date has examined changes in e-cigarette affordability for youth and youth adults in 23 USA states. From 2015 to 2021, while e-cigarette tax burdens increased, e-cigarettes became increasingly more affordable for young people aged 16–34.
HOW THIS STUDY MIGHT AFFECT RESEARCH, PRACTICE OR POLICY
This paper finds that from 2015 to 2021, e-cigarettes have become increasingly more affordable for youth and young adults in 23 USA states. This paper reveals an alarming trend in e-cigarette affordability over the years, and policy efforts should focus on making these products less affordable by increasing tobacco/nicotine product prices through taxation.
Background
In the USA e-cigarette products are the most used tobacco/nicotine product among youth and young adults. In 2022, according to data from the National Youth Tobacco Survey and National Health Interview Survey, approximately 9.4% of middle and high school students, and 12.5% of 18–34-year-olds reported current use of e-cigarettes.1 2 E-cigarette use has remained most prevalent among youth, with the highest reported current e-cigarette use reported in 2019—10.5% among middle school students and 27.5% among high school students.2 3 Moreover, there was a 52.4% increase for young adults from 2019 to 2022 (8.2% to 12.5%, respectively).1 4 Together with this rapid adoption of e-cigarette use by youth and young adults, the market for e-cigarettes has also changed: devices have evolved from cig-a-like, to USB-like, to pod mod styles5; fruity and cooling flavours have proliferated6; nicotine strength has increased7 8; and disposable products have drastically decreased in price per millilitre (mL) of e-liquid, while becoming larger in volume capacity8 allowing customers to purchase more e-liquid for a decreasing outlay of money. Although consumers choose products based on their preferences for product attributes such as flavour, nicotine strength and device type, consumer demand for a product is predominantly determined by product prices and consumer income.9 More specifically, when consumers decide to purchase any product, they make an affordability calculation that is determined on the basis of the products’ price relative to their income.
Although taxes on e-cigarettes have been shown to increase e-cigarette prices,10 a reduction in e-cigarette consumption will only occur if these tax-induced price increases actually reduce their affordability. Numerous studies have shown that changes in prices—derived from tax increases—do affect e-cigarette demand for adults,11–13 youth14 and retail sales.10 Recent studies have estimated price elasticity of demand estimates to range from −1.3 to −2.2, implying that for every 10% increase in price, consumption will decrease by 13%–22%.10 15–17 Additionally, e-cigarette pass-through rates (ie, the rate at which a tax increase is either equally, over or under passed on to the after-tax price of a consumer products) have shown under-shifting, meaning that tax-induced price changes may not always lead to the intended price increase for e-cigarettes which may make e-cigarette more affordable than the tax intended to. Two studies show that a US$1 increase in the e-cigarette standardised price of 1 mL of e-liquid increases prices by US$0.43–US$0.90.10 16
While the literature has predominately focused on the role of prices and how policymakers can affect prices through taxation, employment and income also heavily influence the demand for e-cigarettes. An increase in discretionary income will make e-cigarettes more affordable.18 Thus, for e-cigarette taxation to be an effective policy strategy, tax-induced increases in price must offset any increase in income growth. In the USA, over one-third of teenagers and the majority of young adults work part-time or full-time jobs. In 2022, 32.8% of 16–19-year-olds, 66.0% of 20–24-year-olds and 79.9% of 25–34-year-olds were employed in the civilian labour force.19 While wages vary regionally and by age, the Fair Labor Standards Act established a federal minimum wage of US$7.25 per hour, effective on 24 July 2009.20 Since this minimum wage has not changed since 2009, many states have since adopted their own minimum wage laws. California, Massachusetts, Washington, Connecticut and Washington, DC require minimum wages starting at US$15 per hour.21 22 Tennessee, South Carolina, Louisiana, Missouri and Alabama have not adopted state minimum wage laws.21 In 2015, according to the Bureau of Labor Statistics (BLS), full time employees aged 16–19 had an annual nominal average median weekly earnings of US$389 (US$480 in 2022 US dollars), US$501 (US$619 in 2022 US dollars) for 20–24-year-olds and US$735 (US$908 in 2022 US dollars) for 25–34-year-olds.23 By 2022, incomes increased to US$606, US$706 and US$992 for 16–19-year-olds, 20–24-year-olds and 25–34-year-olds, respectively.23
As policy efforts would never want to impede income growth, tax-induced price changes have the potential to affect e-cigarettes affordability. As of December 2022, 30 states and Washington, DC apply a tax on e-cigarettes.24 Unlike cigarettes, e-cigarette taxation structures vary greatly from state to state.24 Fifteen states—California, Colorado, Illinois, Indiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, Pennsylvania, Utah, Vermont, Wyoming and Washington, DC apply ad-valorem taxes (taxes based on the value of a tobacco product, applied in the form of a percentage) that range from 12% to 95% of wholesale price, manufacturing price or retail price. Eight states—Delaware, Kansas, Louisiana, North Carolina, Ohio, Virginia, West Virginia and Wisconsin—apply an excise tax (taxes based on a constant nominal rate per unit or quantity) that ranges from US$0.05 to US$0.50 per 1 mL. Lastly, seven states—Connecticut, Georgia, Kentucky, New Hampshire, New Jersey, New Mexico and Washington—apply a two-tier mixed tax on e-cigarettes where both ad-valorem and excise tax rates are applied.24
In this paper, we focus on the affordability of e-cigarettes for youth and young adults, by specifically looking at data from 2015 to 2021 for 16–17-year-olds, 18–19-year-olds, 20–24-year-olds and 25–34-year-olds. We use NielsenIQ Stateline data to calculate sales weighted average prices, merged with the Integrated Public Use Microdata Series (IPUMS) total personal income data. To provide context, we also quantify e-cigarette tax burdens. To our knowledge, no research to date has quantified e-cigarette tax burdens and changes in affordability of e-cigarettes for youth and youth adults in these 23 USA states.
Methods
Data sources and methods
To provide context to any changes in e-cigarette affordability, we start by calculating e-cigarette tax burdens in each state, then focus on changes in e-cigarette affordability by examining changes in tax rates, prices and income. For tax rates, we used the tax per 1 mL of e-liquid estimates provided by Cotti et al25 for ad-valorem, specific and two-tiered mixed tax systems; we replicated and updated their work for 2021 figures. For prices, we used the e-cigarette US Stateline files from NielsenIQ Retail Scanner data. This dataset contains data for 23 USA states: Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington. Approximately 78% of the USA population reside in these 23 states. These data provide aggregated UPC level data for sales dollars and sales units from participating food, drug and mass merchandisers, discount and dollar stores, military commissaries and independent, chain and gas station convenience stores. Stateline files are aggregated estimates of sales based on sample stores in each state with a proprietary vendor calculation applied to account for non-participating retailers. Upwards of 95% of e-cigarette data are from the convenience store channel. These data are provided in aggregated 4-week increments which we aggregated to yearly data focusing on data from 2015 through 2021.
To accurately capture changes in price, we constructed an annual sales-weighted average price per 1 mL of e-liquid. This variable is calculated by summing total sales dollars and dividing by total mLs sold in each state and year. Our Nielsen price variable is inclusive of all excise and wholesale taxes that are levied on e-cigarettes. State sales taxes were then included in our price measure using data from The Tax Foundation.26–32 Lastly, to properly make annual price comparisons, we adjusted our nominal dollar figure to real 2021 dollars using the USA Consumer Price Index from BLS.33
We used the personal income variable, INCTOT, from IPUMS, which is described as ‘each respondent’s total pre-tax income or losses from all sources for the previous years.34 The IPUMS dataset also contains individual-level demographical and economic indicators from the American Community Survey.34 We limited the IPUMS dataset to respondents between the ages of 16 and 34 and subset them into four age groups: 16–17, 18–19, 20–24 and 25–34. We separated 16–17-year-olds from 18-19-year-olds because of large differences in employment rates between these age groups. Our final sample from IPUMS included personal annual income for 4 010 869 respondents. One respondent was determined to be a problematic outlier and was removed. More specifically, for the state of Louisiana, for the age group of 16–17-year-olds in 2020, one respondent’s inflation adjusted annual income was more than 21 times higher than the next highest income (US$558 656 vs US$26 388) while also having a survey weight in the top 1% of values. Given these characteristics, this respondent accounted for over 75% of the weighted mean income for Louisiana 16–17-year-olds in 2020, which heavily skewed our mean income measure and calculations for relative-income prices (RIPs). Like our price variable, we adjusted nominal dollar figures to real 2021 US dollars. Since we only have e-cigarette price data for 23 states, we further subsetted our income data to match these states. Lastly, we weighted all our analysis using PERWT, which is a weight used to indicate how many people in the USA population are represented by each person in the sample.35
Our analysis was conducted in four parts. First, we calculated total e-cigarette tax burdens by dividing total taxes into total e-cigarette prices for 1 mL of e-liquid. Second, we analysed real price (2021 US dollars) differences of 1 mL of e-liquid among the 23 states in 2021. Third, we used the RIP method that has been previously used to measure changes in affordability of cigarettes,36–42 sugar-sweetened beverages43 and beer.44 The RIP for cigarettes used the percentage of per capita gross domestic product (GDP) needed to purchase 100 packs of cigarettes a year; the RIP for sugar-sweetened beverages used the percentage of per capita GDP need to purchase 100 L of Coca-Cola; and the RIP for beer used the percentage of per capita GDP needed to purchase 100 cans of the cheapest beer. To fully understand changes in affordability by age, we estimated the percentage of personal annual income needed to purchase 100 mLs of e-liquid. Specifically, we calculated a RIP measure for each age group, in each of the 23 states. We present average RIP by age group for 2015–2020 and expand our analysis to all 23 states for 2021. Positive and larger RIPs indicate less affordability, while negative and smaller RIPs indicate more affordability. Lastly, since our prices exhibit non-linearities, we used Joinpoint regressions (V.4.9.1.0; National Cancer Institute) to calculate average annual percentage change (AAPC) and annual percentage changes (APCs) in real prices and incomes (2021 US dollars), and RIPs from 2015 to 2021. Because of non-linearities, we are unable to follow previous RIP methods,43 44 and cannot subtract the average APC in price from the average APC in RIP to obtain the average APC in income. Instead, we present APC and AAPC in income results using Joinpoint.
Results
Prices and tax burdens
Across all 23 states, the inflation adjusted (2021 US dollars) sales weighted annual average price of 1 mL of e-liquid (price) from 2015 to 2021 was US$5.26, a decrease of 16.2% from the largest average of US$6.28 in 2018. Prices, however, varied considerably across all 23 states. On average, 2015–2021 prices were the highest in California at US$7.45 and the lowest in Kentucky at US$4.59. Tax burdens also varied considerably, from 2015 to 2021 the average tax burden was 7.9%. In 2021, the average tax burden increased to 13.2% from an average of 5.1% in 2015. Despite having the average lowest price per mL of e-liquid, Kentucky, which applies both an ad-valorem and a specific excise tax, had the largest tax burden at 43.1%, while Alabama, which only applies a sales tax, had a tax burden of 3.9% (online supplemental table 1). In 2021, states that applied an ad-valorem tax—Massachusetts, California, Pennsylvania, Oregon, New York, Colorado and Illinois—had a higher average tax burden, 23.8%, compared with states with a two-tiered mixed, specific excise or sales tax, which had average burdens of 17.0%, 6.5% and 5.4%, respectively (results not shown).
Supplemental material
When looking specifically at 2021 price (2021 US dollars) data, Alabama had the lowest price at US$3 per 1 mL of e-liquid, compared with US$7.20 in Massachusetts. Although 15 states in our sample apply either an ad-valorem, specific excise or a two-tier mixed tax, states applying ad-valorem taxes had consistently higher prices. In addition, Washington and New Jersey, which apply a two-tier mixed tax, had higher prices than the average. Although Geogia, North Carolina, Ohio, Virginia, Kentucky and Louisiana tax e-cigarettes in addition to applying a state sales tax, their prices per 1 mL of e-liquid were below the 23-state average of US$4.45 (online supplemental table 1 and online supplemental figure 1).
As expected, real (2021 US dollars) average incomes increased over time across all age groups and older age groups on average made more than younger age groups (online supplemental table 2). On average, 16–17-year-olds made US$1793 a year, whereas 18–19-year-olds, 20–24-year-olds and 25–34-year-olds made US$5786, US$16 746 and US$39 340 from 2015 to 2021, respectively.
The RIP of 100 mLs of e-liquid in 2021 also varied substantially across age groups and states. On average across our 23 states 16–17-year-olds needed 23% of their annual 2021 income to purchase 100 mLs of e-liquid, compared with 18–19-year-olds who needed 7%, 20–24-year-olds who needed 3% and 25–34-year-olds who needed 1% (table 1 and online supplemental figure 2). In 2018, all age groups needed more of their annual income to purchase 100 mLs of e-liquid than they needed in 2021 (table 1). For all age groups in 2021, more annual income was needed to purchase 100 mLs of e-liquid in states with ad-valorem and two-tiered taxes than for states with specific excise or sales taxes only.
Average relative income price using NielsenIQ Stateline Data and IPUMS average total personal income by age group from 2015 to 2021
Changes in prices from 2015 to 2021
For all states, except for New Jersey, Massachusetts, Texas and Missouri, statistically significant inflection points were found in the Joinpoint trend analysis in 2018. We present AAPCs results for 2015 to 2021, and where inflection points were found, APCs from 2015 to 2018 and 2019 to 2021. From 2015 to 2021, the AAPCs in price varied by the type of e-cigarette taxation structure in place. States applying two-tired and ad-valorem taxes tended to have larger average annual e-cigarette prices. States that only had sales taxes, on average tended to have smaller average annual e-cigarettes prices. When looking at differences in APCs, almost all states’ e-cigarette prices were increasing from 2015 to 2018 with an average APC of 12.7%. However, from 2019 to 2021 e-cigarette prices decreased in all states except New York, with APCs ranging from −25.7% in Florida to −0.2% in Oregon. The largest decreases were for states that only had sales taxes followed by states that applied specific excise taxes (figure 1). Although California, which applies an ad-valorem tax, stands out as its price decreased with an APC of −21.6%.
Real Price (2021 US dollars) AAPC of 1 mL of e-liquid from 2015 to 2021, real price (2021 US dollars) APC of 1 mL of e-liquid from 2015 to 2018 and 2019 to 2021. States with two-tiered, ad-valorem and specific excise tax also include sales taxes; blue shaded states only tax e-cigarettes through state sales taxes. Pattern shaded results for New Jersey, Massachusetts, Texas and Missouri in the APC prices from 2015 to 2018 and 2019 to 2021 are present in the figure for presentations purposes only; no inflection points were found in the Joinpoint trend analysis for these states. The calculated average value considers the non-statistically significant segments that are pattern shaded. AAPC, average annual percentage change; APC, annual percentage change.
Changes in income from 2015 to 2021
No inflection points were found in the Joinpoint trend analysis of incomes. With only minor exemptions, Louisiana for 16–17-year-olds (figure 2), Oregon, Texas and Missouri for 18–19-year-olds (figure 3) and Louisiana for 25–34-year-olds (figure 4), all age groups had increasing AAPCs in income during 2015 to 2021 (figures 2–5). On average, for 16–17-year-olds the AAPC in income was a 4% increase, and 2.4%, 2.6% and 2% for 18–19-year-olds, 20–24-year-olds and 25–34-year-olds, respectively (figures 2–5).
RIP AAPC from 2015 to 2021, RIP APC from 2015 to 2018 and 2019–2021 for 16–17 year-olds. States with two-tiered, ad-valorem and specific excise tax also include sales taxes; blue shaded states only tax e-cigarettes through state sales taxes. Pattern shaded results for Washington, Illinois, Louisiana and Indiana in the RIP APC from 2015 to 2018 and 2019 to 2021 are present in the figure for presentation purposes only; no inflection points were found in the Joinpoint trend analysis for these states. The calculated average value considers the non-statistically significant segments that are pattern shaded. AAPC, average annual percentage change; APC, annual percentage change; RIP, relative-income price.
RIP AAPC from 2015 to 2021, RIP APC from 2015 to 2018 and 2019 to 2021 for 18–19-year-olds. States with two-tiered, ad-valorem and specific excise tax also include sales taxes; blue shaded states only tax e-cigarettes through state sales taxes. Pattern shaded results for Massachusetts, New York, Virginia, Texas, Florida and Missouri in the RIP APC from 2015 to 2018 are present in the figure for presentations purposes only; no inflection points were found in the Joinpoint trend analysis for these states. The calculated average value considers the non-statistically significant segments that are pattern shaded. AAPC, average annual percentage change; APC, annual percentage change; RIP, relative-income price.
RIP AAPC change from 2015 to 2021, RIP APC from 2015 to 2018 and 2019 to 2021 for 20–24-year-olds. States with two-tiered, ad-valorem and specific excise tax also include sales taxes; blue shaded states only tax e-cigarettes through state sales taxes. Pattern shaded results for New York and Colorado in the RIP APC prices from 2015 to 2018 are present in the figure for presentations purposes only; no inflection points were found in the Joinpoint trend analysis for these states. The calculated average value considers the non-statistically significant segments that are pattern shaded. AAPC, average annual percentage change; APC, annual percentage change; RIP, relative-income price.
RIP AAPC from 2015 to 2021, RIP APC from 2015 to 2018 and 2019 to 2021 for 25–34-year-olds. States with two-tiered, ad-valorem and specific excise tax also include sales taxes; blue shaded states only tax e-cigarettes through state sales taxes. Pattern shaded results for Massachusetts and New York in the RIP APC prices from 2015 to 2018 are present in the figure for presentations purposes only; no inflection points were found in the Joinpoint trend analysis for these states. The calculated average value considers the non-statistically significant segments that are pattern shaded. AAPC, average annual percentage change; APC, annual percentage change; RIP, relative-income price.
Changes in Affordability from 2015 to 2021
As we did with prices, we present AAPCs results for 2015 to 2021, and where Joinpoint inflection points were found, APCs from 2015 to 2018 and 2019 to 2021. When examining AAPC in RIPs from 2015 to 2021, e-cigarettes became increasingly more affordable for all age groups (figures 2–5).
For 16–17-year-olds, except for youth living in Kentucky and New Jersey which have a two-tiered tax system, and Massachusetts and Oregon, which have ad-valorem taxes, e-cigarettes became more affordable (figure 2). When looking at differences in APCs, for almost all states e-cigarettes were becoming less affordable from 2015 to 2018 with an average APC of 5.9%, however, from 2019 to 2021 e-cigarette became increasingly more affordable with an average APC of −14%. Two major exceptions are Massachusetts (14.1%) and New York (4.0%) which passed ad-valorem taxes in June of 2020 and December of 2019, respectively (figure 2).
For 18–19-year-olds, 20–24-year-olds and 25–34-year-olds, e-cigarettes also became increasingly more affordable from 2019 to 2021, with state average APCs of −9.7%, −12% and −13.4%, respectively (figures 3–5). Comparable to 16–17-year-olds, Massachusetts is the only exception. When examining AAPCs in RIPs overall, states with ad-valorem and two-tiered mixed taxes tended to have positive RIPs and therefore less affordable e-cigarettes. The same is true for APCs from 2019 to 2021, where states with ad-valorem and two-tiered mixed tax experienced more attenuated increases in affordability then states with specific excise and sales tax only systems which experienced large increases in affordability.
Discussion
We are the first to document e-cigarette tax burdens and changes in e-cigarette affordability for 16–34-year-olds in the USA. Despite the presence of either ad-valorem, specific excise or two-tiered tax systems in 15 of the 23 states analysed and some large tax burdens, e-cigarettes became increasingly more affordable from 2019 to 2021, with Massachusetts being the only exception. E-cigarettes became more affordable due to the fact that all age groups experienced average income growth, while the price of e-cigarettes drastically decreased.
We consistently find that states applying ad-valorem taxes had larger tax burdens and prices than states applying two-tiered and specific excise taxes. In addition, while e-cigarettes became increasingly more affordable for all states from 2019 to 2021, states with ad-valorem taxes experienced more attenuated increases in affordability. Historically and according to the WHO larger specific excise taxes, in general, tend to have many advantages over ad-valorem taxes as they reduce price gaps among different products, encourage production of higher-priced products, and prices are harder to manipulate by the industry.45 From a government perspective they are easier to administer and provide more stable revenue.24 However, specific excise taxes are more effective for homogeneous products such as cigarettes and little cigars. As our analysis demonstrated though, and given the vast array of e-cigarettes available, ad-valorem taxes appear to be a more appropriate tax system.24 In addition, given the lack of a three-tiered distribution (manufacturer/importer, wholesale/distributor and retailer) system for e-cigarette sales, it can be nearly impossible to determine on what party to levy a tax on. Given this unique challenge, levying ad-valorem taxes based on tax-inclusive retail prices for e-cigarettes should minimise the potential for tax avoidance and may have the greatest impact on consumer behaviour.24
Numerous studies have argued that increasing the price of e-cigarettes will discourage uptake and use by older age groups who would otherwise use e-cigarettes instead of cigarettes.11 13 Given how little income (1%) is needed for 25–34-year-olds to annually purchase 100 mL of e-liquid, even a doubling of average prices would only require a minimal increment in income. This is not true for 16–17-year-olds and 18–19-year-olds whose purchasing power would be severely constrained. Massachusetts is a good example of where e-cigarettes are less affordable; in 2021, 16–17-year-olds and 18–19-year-olds had to outlay close to 36.9% and 12.5% of their annual income, respectively, to purchase 100 mL of e-liquid. As this example shows, any further increases in price would affect younger age groups—discouraging their use—more than older age groups.
Our analysis also illustrates the importance of periodically increasing prices to outpace income growth and inflation, this is especially true for states with specific excise taxes,46 as one advantage of applying ad-valorem taxes is that they automatically adjust for inflation.24 Changes in technology, adoption of economies of scale in production9 and increases in competition as more e-cigarettes enter the market, will only make e-cigarettes more affordable over time,17 highlighting the important role that policymakers play in making e-cigarettes less affordable. A number of studies indicate that e-cigarette taxes are effective at increasing prices,10 reducing e-cigarette prevalence, intensity of use14 and sales.10 To make e-cigarettes less affordable, policymakers can implement and should regularly increase e-cigarette taxes, especially specific excise taxes which directly affect the price of e-cigarettes. Policymakers using specific excise tax systems may consider benchmarking future e-cigarette taxes for affordability and/or inflation. When taxation policies are not feasible, implementing minimum pricing and minimum markup laws, and/or banning discounting or coupons are also effective tobacco policies that aid in increasing the price of e-cigarettes.
Lastly, we included sales taxes in our prices to provide a complete analysis of e-cigarette tax burdens. However, we want to make clear that specific excise taxes for homogenous products such as cigarettes and ad-valorem taxes for heterogenous products such as e-cigarettes are the most important type of tax available to legislators to promote health.24 Well-designed tax systems that are specifically applied to products, in this case e-cigarettes, will always have the greatest impact on relative prices. Sales taxes, on the other hand, tend to have lower rates and are applied more broadly to goods and services, thus having little impact on price.
Limitations
Our analysis is constrained in five distinct ways. First, we are limited by the 23 state-level data available by NielsenIQ. While this data does cover over three quarters of the USA population, it limits our ability to make inferences on regional differences across all states in the USA. Second, our income sample is limited by the time frame available by IPUMS. Purchasing behaviour and income patterns changed due to the COVID-19 pandemic47 48; because our data end in 2021 we are unable to extend our analysis into a time frame where COVID-19 effects were less pronounced. Third, because we focus on average incomes across age groups, we do not capture income disparities across gender, race and ethnicity. Furthermore, we do not consider family income, which may increase income; or taxes which may decrease income. Ideally, we would have liked to have access to a post-tax measure of income. It is unclear which of these may be more prominent. Fourth, since Tobacco 21 laws make it illegal for 16–20-year-olds to buy products on the legal market, it is possible that our pricing data does not capture the true price paid by these age groups. By one estimate 56.9% of youth obtain their devices through social sources, making it unclear what price they pay.49 In the same manner our data does not capture sales online or from small independent vape shops, where prices paid may also be different from what we observed in our retail sales data. Lastly, our tax burden calculations may be incorrect, as they rely on the assumptions used by Cotti et al25 to calculate a standardised e-cigarette tax value.
Conclusions
In just 7 years, decreases in e-cigarette prices and increases in income have made e-cigarettes more affordable in the USA. More affordable products lead to more consumption. Previous research has found that the enactment of e-cigarette taxes increases prices. Alarmingly, despite numerous states enacting e-cigarette taxes over this time period, e-cigarettes have become more affordable for youth and young adults. Since policymakers would never want to impede income growth, they should focus on reducing e-cigarette affordability through higher tax rates, indexed for inflation if using specific excise taxes, establishing minimum pricing and markup laws and limiting price promotions, rebates and coupons. These price increases will make e-cigarettes less affordable for younger age groups, who must use a large percentage of their income to purchase e-cigarettes.
Data availability statement
Data are available upon reasonable request. Data may be obtained from a third party and are not publicly available.
Ethics statements
Patient consent for publication
Ethics approval
Not applicable.
References
Supplementary materials
Supplementary Data
This web only file has been produced by the BMJ Publishing Group from an electronic file supplied by the author(s) and has not been edited for content.
Footnotes
X @MeganCDiaz, @ehairphd
Contributors MCD is the guarantor and contributed to the conceptualisation, writing, editing, validation, data curation and methodology of the paper. KB contributed to the writing, visualisation and project administration of the paper. TM conducted the formal analysis and contributed to the data curation and writing of the paper. ECH contributed to the writing, review, editing and supervision of the paper. JAT contributed to the validation, writing, review and editing of the paper.
Funding This study was funded by Truth Initiative.
Disclaimer The conclusions drawn from the NielsenIQ data are those of the researcher(s) and do not reflect the views of NielsenIQ. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported.
Competing interests Dr Diaz has received tobacco-related consulting work from WHO.
Provenance and peer review Not commissioned; externally peer reviewed.
Supplemental material This content has been supplied by the author(s). It has not been vetted by BMJ Publishing Group Limited (BMJ) and may not have been peer-reviewed. Any opinions or recommendations discussed are solely those of the author(s) and are not endorsed by BMJ. BMJ disclaims all liability and responsibility arising from any reliance placed on the content. Where the content includes any translated material, BMJ does not warrant the accuracy and reliability of the translations (including but not limited to local regulations, clinical guidelines, terminology, drug names and drug dosages), and is not responsible for any error and/or omissions arising from translation and adaptation or otherwise.