When all eyes were focused on the emerging coronavirus outbreak, Kentucky lawmakers managed to raise taxes and abandon their long-held, forward-looking tax philosophy that placed a premium on harm reduction. Indeed, thanks to HB 351, e-cigarettes – a tobacco harm reduction product – will be taxed at a much higher rate come August 1, but this is problematic on a couple fronts. In fact, Kentucky’s new tax law could undermine public health, and it also flies in the face of Kentucky’s tax framework.

The Kentucky code reads, “…the General Assembly acknowledges that some in the public health community recognize that tobacco harm reduction should be a complementary public health strategy regarding tobacco products. Taxing tobacco products according to relative risk is a rational tax policy and may well serve the public health goal of reducing smoking-related mortality and morbidity and lowering health care costs associated with tobacco-related disease.”

Despite officially maintaining this stance, Kentucky lawmakers’ latest tax increase conflicts with this philosophy. Indeed, the science is clear: e-cigarettes are far less harmful than combustible cigarettes. The venerated Public Health England stated that e-cigarettes are 95 percent less hazardous because they do not employ the combustion process that releases thousands of chemicals – many of which are carcinogenic. The US Surgeon General stated that e-cigarettes’ effects on the body are similar to nicotine patches, gum, and lozenges, and e-cigarettes have become the number one tool Americans use to quit smoking cigarettes.

Even though e-cigarettes are less harmful than combustibles and help Americans kick their smoking habit, the Kentucky Legislature strangely saw fit to tax e-cigarettes at $1.50 per cartridge, compared to a $1.10 tax per pack of cigarettes. But this tax hike does little other than to disincentivize Kentuckians from trying less dangerous products, like e-cigarettes, in lieu of combustible cigarettes.

What’s more, this tax disparity may encourage e-cigarette users to return to smoking, which runs counter to public health officials’ goals. The truth is that Kentucky must do better. After all, nearly a quarter of Kentuckians are smokers, almost 9,000 die a year from tobacco use and roughly $1.9 billion are spent on related healthcare costs a year.

Kentucky’s tax hike is clearly inconsistent with its longstanding position on taxing “products according to relative risk”, and it will ultimately lead to adverse health effects. Further, given that Kentucky’s e-cigarette tax is one of the largest in the country, this may drive Kentuckians, who live in communities near the state’s border, to make e-cigarette purchases out-of-state – ensuring that Kentucky will collect less in taxes.

A central role of state governments is taxing the public and products. Taxation helps pay for police, roads, schools, etc. However, excise taxes, like those on tobacco products and e-cigarettes, ought to be fairly balanced based on relative risk and provide beneficial public health outcomes. Kentucky policymakers used to hold this belief. Unfortunately, they’ve recently strayed from their roots.

Image credit: Nomad_Soul

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