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No Impact on New England Sales

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Earlier this month, JAMA Inner Medication revealed a study in regards to the impression of banning flavored tobacco merchandise in Massachusetts. The examine discovered, not surprisingly, that the sale of flavored tobacco decreased following the ban. By evaluating gross sales in Massachusetts with gross sales throughout 27 different states, the authors noticed that gross sales had decreased extra in Massachusetts than within the management states.

Such a end result would point out that the flavour ban has been a hit. Sadly, the examine neglected a vital piece of data: cross-border commerce. The tip results of the ban, in truth, is that Massachusetts is caught with the societal prices related to consumption, whereas the income from taxing flavored tobacco merchandise is being raised in neighboring states.

Whereas the authors acknowledge this shortcoming within the examine design, the omission severely skews the conclusion. In truth, the flavour ban has been removed from profitable, as gross sales in each New Hampshire and Rhode Island skilled double-digit development—virtually making up for your entire lower in Massachusetts.

The examine used scanner information to check gross sales in Massachusetts with gross sales throughout the management states whereas concurrently controlling for value, inhabitants development, and a lot of different components. Whereas this may occasionally appear to present a superb indication of gross sales developments, the examine solely included one state that borders Massachusetts: Connecticut, the place there was no actual change in gross sales, mainly as a result of that state’s tobacco taxes are extraordinarily excessive.

Specializing in the jurisdiction with the ban, and never contemplating the developments within the area, limits the usefulness of the information, as in-state gross sales solely inform one aspect of the story.

Now we have beforehand explored the tax income impression of taste bans (see right here and right here) and the rise in cross-border commerce (a number of different teams have documented this as properly: see here and here). We discovered, much like the above-mentioned examine, that in-state gross sales decreased considerably. For Massachusetts, that resulted in declines of tobacco excise tax income (cigarettes and smokeless tobacco) of $125 million for fiscal 12 months 2021.

It stands to cause that if consumption really disappeared, and these taxes had been genuinely supposed to account for the harms brought on by the merchandise, nobody could be anxious about such a loss in income—if consumption is gone, so are the societal prices related to consumption. Sadly, taste bans are mainly literal legal guidelines of unintended penalties. The issue is that consumption has not disappeared following Massachusetts’ ban; gross sales to Massachusetts residents have merely moved out of the state.

JAMA network study Massachusetts Flavored Tobacco Ban: No Impact on New England Sales New study explores the effects of state tobacco tax rates (cigarette tax rates) on cigarette smuggling

In Massachusetts, the one state with a statewide taste ban, gross sales information is out there for the primary 12 months following its implementation, that means from June 2020 by means of Could 2021. Gross sales within the Bay State declined by virtually 24 % in comparison with the 12 months previous the ban. This decline interprets to $116 million much less cigarette tax income for Massachusetts (not together with gross sales tax losses). The losses are even larger if smokeless tobacco is included ($125 million). These gross sales moved to neighboring states: gross sales of cigarettes in New Hampshire elevated by 22 % and in Rhode Island by 18 %. As such, this ban has not had a constructive impression on public well being; the one impression was on Massachusetts’ backside line.

It isn’t shocking that gross sales of flavored tobacco merchandise decreased in Massachusetts itself—the merchandise are unlawful to promote. However to manage for cross-border commerce, the authors of the examine may have employed a regional evaluation, evaluating New England to the Mid-Atlantic, Gulf States, West Coast, and many others. Had gross sales decreased extra in New England than in these different areas, it will point out that the flavour ban had been a hit.

Because it occurs, wanting on the New England area as an entire confirms that the flavour ban didn’t work as supposed. Gross sales moved round fairly than disappeared, and the ban evidently didn’t impression consumption. Whole gross sales for the area decreased by barely greater than 1 % evaluating the 12 months previous the ban to the 12 months following the ban—largely corresponding to the nationwide gross sales tendencies.

State tax coffers are usually not all that’s impacted by this ban, nonetheless. Bans impression the small enterprise house owners working vape outlets, comfort shops, and fuel stations, with out essentially decreasing smoking total.

This 12 months, a number of states and the federal Meals and Drug Administration are (or might be) contemplating following Massachusetts’ instance by banning flavored tobacco merchandise. Research just like the one revealed in JAMA Inner Medication would point out that doing so is useful to public well being. Nonetheless, lawmakers ought to suppose twice earlier than implementing such bans. The expertise out of Massachusetts has not been a hit story and different states ought to be cautious of conducting their very own costly experiments.

As well as, the ban on flavored tobacco highlights the issues of contradictory tax and regulatory coverage, the instability of excise taxes that transcend pricing in the price of externalities, and the general public dangers of driving shoppers into the black market by means of extreme taxation or regulation.


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