Will Vermont's New E-Cigarette Tax Lead To A Vaping Black Market?

Jul 12, 2019

E-cigarettes are the target of a hefty new state tax — one experts say should reduce teen vaping. But could the new tax lead to a vaping black market in Vermont?

The Vermont Department of Health says use of e-cigarettes among middle and high school students "significantly increased" since 2015, and the annual Vermont Youth Risk Behavior Survey reflects national trends that see vaping increasing among youth even as the use of alcohol and other drugs declines.

More from NPR — "Surgeon General Warns Youth Vaping Is Now An 'Epidemic'" [Dec. 18, 2018]

As of July 1, a new Vermont state law levies a 92% tax on e-cigarettes. Another makes it harder to buy vaping items online. 

The new tax doesn't mean those buying refill cartridges or other vaping items are dealing with a direct 92% price hike at the register, but it does mean retailers will have to pay more to carry the items — and cost increases will eventually be passed on to customers.

UVM economics professor Nathalie Mathieu-Bolh studies tax policies and how taxes affect consumption of things like food and tobacco products.

She told Vermont Edition that the research on tobacco taxes shows they do effectively reduce use: smoking falls by about 5% for every 10% increase in price. And, she said, higher prices are even more effective at deterring what she calls "price-sensitive smokers" — often young smokers on tighter budgets.

While less is known about e-cigarettes because they're a new form of nicotine use, Mathieu-Bolh said, based on what we know about traditional cigarettes, any illicit market as a result of the new tax will likely be small.

"Yes, there might be the development of a black market," Mathieu-Bolh admitted, but such a market for traditional cigarettes "has not prevented cigarette taxes to be effective at reducing cigarette smoking, especially among the youth."

Relying only on regulations on e-cigarette packaging, or on education about the harmful effects of vaping, simply isn't enough to reducing youth use, she said.

Taxes are "still the best we tool have to reduce cigarette smoking among the youth," she emphasized.

Another Vermont law, which raises the age to buy any tobacco or vape product to 21, takes effect in September.

Listen to the full interview with Mathieu-Bolh above to hear more about how the new e-cigarette tax could affect users in Vermont.

Broadcast live on Thursday, July 11, 2019 at noon; rebroadcast at 7 p.m.