Could Falling Tobacco Taxes Be Behind Anti-Vaping Campaign?

While Public Health England estimates vaping is around 95% safer than smoking, vaping has seen a steady stream of negative stories hitting the headlines. Many of these stories are coming from US states who are facing billions of dollars in losses from tobacco revenues, and in some cases could face bankruptcy.

US states are paid revenues annually by tobacco companies under a settlement which promises them over 200 billion in dollars. But these revenues are based on cigarette sales, and the fewer cigarettes sold, the less money the states receive.

States are supposed to spend a portion of this money on smoking prevention and treatment of smoking diseases, but in some cases states have chosen to reinvest this money back into tobacco production.1

An analysis by E-Cigarette Direct shows that many of the states who receive money from the tobacco companies have used the revenues to finance tobacco bonds. 2 These states need to pay up to 76 times the amount they originally borrowed despite lower revenues. 3 Moody’s estimate 80% of these bonds are likely to default, leading to interest penalties, lowered credit rates and even possible bankruptcy. 4.

Many of the negative publicity around vaping has originated from the very states likely to suffer most from falling cigarette sales. For example, California receives the most money from tobacco companies, is behind on its tobacco bond payments and has spent 75 million on a campaign to demonise vaping. 5

James Dunworth, Chairman of E-Cigarette Direct, said:

“Vaping is a disruptive industry which threatens over USD700 billion in worldwide tobacco revenues and USD250 billion in tax revenues. It would be naive to think that those threatened by vaping would take no action. Negative stories around vaping are keeping smokers smoking, and need to be viewed with a sceptical eye rather than being taken on blind faith.”



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