Nicotine Taxes Kill

Nicotine pouches, vapes and other smoke-free devices are becoming increasingly popular because they deliver nicotine without the toxic chemicals of tobacco smoke. However, politicians nationwide are moving to tax these products as heavily as cigarettes.

Washington State began imposing such taxes at the start of this year. Utah lawmakers recently advanced a similar proposal through the state House. In New York, the measure is a part of the governor’s proposed 2026 budget.

Matching cigarette taxes on these lower-risk alternatives would penalize smokers trying to quit while boosting the profit margins of illegal smuggling operations. The terrible effects cigarettes have on our health are well known. The byproducts of tobacco smoke (ammonia, tar, heavy metals and more) can cause tooth decay, strokes, heart failure and cancer.

We’ve all seen the ads. Nicotine is the most addictive substance in tobacco, leading many to think, wrongly, that it is its most dangerous compound. According to a 2017 survey by the Food and Drug Administration, three-fourths of U.S. adults were unaware that nicotine, while addictive, does not cause cancer. Numerous reputable institutions, including the British National Health Service, have labeled nicotine as “relatively harmless.”

Consuming nicotine by itself won’t kill you. In fact, it might even save your life if you are a regular smoker. According to Jeffrey A. Singer, an expert in harm reduction and a practicing surgeon: “If tobacco smokers can get their nicotine using safer means, such as e‑cigarettes, it can make it easier for them to give up tobacco and avoid its harm.”

As with any addiction, people who stop smoking might experience cravings and withdrawals. Evidence shows nicotine products can help quitters overcome these hurdles and permanently break their tobacco dependence. This process is known as Nicotine Replacement Therapy. Its effectiveness is the reason nicotine is on the World Health Organization’s List of Essential Medicines.

When it comes to saving smokers’ lives, that raises an important question: Why do they have to quit nicotine? Nicotine addictions are hard to shake off. If smokers switch to safer devices, they can get their nicotine fix without endangering their lungs by filling them with smoke and setting off on the road to cancer.

The advent and expansion of nicotine products, alongside other alternatives to cigarettes, have played a crucial role in curbing smoking rates from 42.6 percent in 1965 to 11.6 percent in 2022. Rational tax policies have also played an important role in curbing the trends of tobacco smoke.

Historically, special taxes have been levied on tobacco products and other “vices” such as alcohol consumption and gambling. Part of this rationale is that the consumption of these products (smoking or drinking) might negatively affect others (such as through secondhand smoke or drunk driving). As such, higher prices in these products might disincentivize their use.

Using smokeless nicotine products only affects the person consuming them; no one else. It is not clear how limiting nicotine consumption could improve our communities or fix any externalities, which turns this into a matter of private (not public) health.

Increasing the tax burden of nicotine would also be a disaster for law and order. When taxes go up, so does illicit trade. Criminal gangs profit from selling illegal nicotine products and funnel that money into other unlawful activities. Cigarette smuggling is already prevalent in the jurisdictions where these products are most heavily taxed.

According to a recent study of littered cigarette packs in New York City, only 16.6 percent had the appropriate NYC tax stamp. The study found most of these illegal cigarettes came from states with much lower excise taxes (mostly Georgia and Virginia). A large tax hike on nicotine products might cause a similar outcome.

As with any product, illegal sellers of nicotine products have little incentive to provide quality assurances or check IDs to ensure their clients are not underage. This makes consumers (including children) more likely to purchase adulterated products containing dangerous, untested compounds.

The market for illegal vaping products was more than $2.4 billion in 2024. There is no need to make it larger and more profitable. Banning, taxing and otherwise restricting the sale of a product like nicotine enriches criminal gangs and puts consumers at risk. In the case of nicotine products, there are also risks reversing hard-won gains in the fight against tobacco smoking. Addictions can take people to the worst places; when politicians get addicted to overregulating, they take us all there with them.