The problem being addressed in the proposed policy plan is electronic cigarettes (e-cigarettes). It has been observed that the use of e-cigarettes among the US middle and high school student doubled between 2011 and 2012 (Drummond & Upson, 2014). A major concern to the increased prevalence of consumption of e-cigarettes especially among the youths is that it is considered to be a pathway for conventional cigarettes smoking. This is known to eventually lead to health-related issues. This has been noted to have negative effect to the years of effort that has been put by the public health and medical departments in an effort to control smoking tendency. Lack of strict regulations on the production, sale, and usage of e-cigarettes has been highlighted as having a possibility of causing increase in levels of nicotine dependence and collude the incentives for cessations. The proposed strategies to deal with this policy problem, to be discussed in this paper are; retailer licensing, taxation, and labelling and disclosure requirement.
The laws on tobacco retailer licensing mandate the businesses involved in selling tobacco products to acquire a license from the government. This is considered as a means for the authority to identify the purveyors of tobacco and implement and follow up to assert that the there is compliance with the rules and regulations on tobacco. The Center for Tobacco Policy and Organizing at the American Lung Association of California provides the characteristics of a strong licensing law. These include; should be renewed annually, should adequately fund using the fee collected tasks such as enforcement and administration of the program, appreciate and relate the full landscape of laws whether federal, state, or local, and set out fines for violations of a magnitude huge enough to act as a deterrent. A study has highlighted that the e-cigarette availability to be approximately 30% (Rose, Barker, D’Angelo, Khan, Huang, Chaloupka, & Rabisl, 2014). It was noted that most pharmacy, gas, and convenience stores were likely to sell e-cigarettes in comparison to beer, wine, or liquor stores.
Taxation is the most commonly used policy for curbing tobacco use. This is commonly referred to as the sin tax that aims to make the prices very high to discourage their use. Cigarette taxation has been described as the most effective means of reducing cigarette consumption. Studies have established there being an inverse relationship between taxation and tobacco use. It has been indicated that for every 10% increase in the actual price causes a reduction of cigarette consumption by about 3-5% (Atwater, et al., 2015). The strategy proposed here is to increase the taxes for e-cigarettes which will cause increase their prices thereby discourage their use due to price sensitivity of the product.
This strategy aims at sensitizing the consumers by providing them with the information through product warning labels on the associated risks with smoking e-cigarettes. The most effective way is to do this is to use graphic messages providing knowledge on health harms. This approach has been considered as an essential tool to promote prevention and cessation of tobacco use. This will therefore be an effective strategy for policy plan to deal with the issue of e-cigarette (Atwater, et al., 2015).
Strengths and Weakness
An objective of the retailer license is to provide a means for restricting the density and location of retail outlets in a specific area. Introducing the retailer laws as a means of restricting the access points for the e-cigarette is noted to be beneficial in reducing the prevalence of up taking the behavior. It has been noted that easy access to the retailers caused increased rates of teen smoking. The restriction the number of retailers is an important counter-measure for the negative effect living close to tobacco retail outlets on cessation of smoking. The trend in the distribution of tobacco retailers seems clustered in low-income neighborhood, that is mainly inhabited by the African-America causes disparities in tobacco use and related health outcomes. The retailer licensing provides an opportunity for the relevant authority to address these disparities in these marginalized societies.
A key strength of the using taxation as policy plan for dealing with the issue of e-cigarettes is pegged on the price elasticity of the tobacco. Studies have revealed that despite the theoretical concept indicating that cigarette addiction may cause price inelasticity. However, studies have proved that cigarette taxation is the most effective means of reducing cigarette consumption. Studies have shown that there is a 10% hike in overall price of cigarette causes a decrease in overall cigarette consumption by 3-5%, reduction in young adult smokers by 3.5%, and 6-7% reduction in number of children engaging in smoking (Atwater, et al., 2015).
A strength of using the labeling and disclosure requirement is on the use of visual and graphics for the required information. The visuals and graphics are an effective means of ensuring that the consumers understand the risks of use of the e-cigarettes. This provides detailed information that provides greater knowledge of health harms.
A key weakness in licensing of retailers is that it leads to creation of specialized retailers focusing on e-cigarettes. Such shops are likely to feature more extensive product range and offer first-hand advice on e-cigarette thereby increasing the prevalence. These stores are likely to enjoy economies of scale and thereby reduce prices for customers. This is most likely to expand their market to even the non-smokers. This is likely to erode potential health gains. A key weakness in the use of labeling and disclosure requirement is based on the fact that the information provided in these labels in insufficient to discourage users from using the e-cigarettes. A study revealed that cigarettes users get access to the warning labels messages for more than 7000 times annually. Despite this, the prevalence of smoking still continues to increase which puts a question on how effective these messages are.
Among the key risks associated with use of taxation as a policy for dealing with the issue of e-cigarettes is the risk of reversing progress by people who had ceased smoking conventional who might fall back into smoking. The risk is due to the absence of cost benefits and lack of suppliers for the e-cigarettes. Another risk from taxation is the message it might sends to the users who might get the notion that by taxing the e-cigarettes almost on the same level as conventional cigarettes, that the e-cigarettes are as harmful as the traditional cigarettes thereby become indifferent to whether they smoke or vape (IVVA, 2017).
An internal risk associated with the use of labelling and disclosure requirement is on the use of a language and words that highlight that less negative impact from the use of product. Such a problem was identified by the FDA in its requirement for labelling of tobacco products. This prompted the use of a law that prohibits the use of words such as “light, mild, or low” in the label and adverts (FDA, 2018). A risk in the adoption of retailer licensing is shifting the trade to illegal dealings in area where restrictions has been put.
In the development of these policy plan, politics comes a play as a factor that may hinder their success. The policies are meant to restrict access to and public use of e-cigarettes. These policies need to go through a debate in different jurisdiction in the USA which might lead to different position. The manufacturers and dealers are known to use massive resources for lobbying to influence such debates. This introduces a risk in their enactment and adoption. A key political factor affecting the strategy on taxation is the differences applied across the different states. While different states have placed taxes, the rates are varied across the state. In 2011, New York had a $4.35 tax rate which was 25 times higher that placed in Missouri of $0.17 (Golden, Ribisl, Perreira, 2014). This geographical variation may lead to cross-border smuggling or online tobacco sales thereby watering down the public health impacts. In the use of the strategy on the labelling and disclosure requirement, there is need to ensure that the rules provided by the states are in line with the requirements by the FDA. In relation to retailer licensing, the FDA lacks legislative authority to regulate the areas where e-cigarettes may be used (Sanders-Jackson, Tan, Bigman, Mello, Niederdeppe, 2016).
A key economic factor associated with taxation of the e-cigarettes is the price sensitivity of the e-cigarettes. Studies have revealed that sales of e-cigarette are responsive to price changes. This implies that use of excise taxes is effective in reducing the increased prevalence in e-cigarette consumption. The e-cigarettes and the conventional cigarettes are considered as substitutes where the increase in prices of one product leads to increase in demand of the other. Economic static models reveal that for every 10% increase in the e-cigarette prices, there is a reduction in e-cigarettes sales about 8.2%. dynamic model shows a reduction by 2.7% in the short run and 11.5% in the long-run (Stoklosa, Drope, & Chaloupka, 2016). It is such benefits that the taxation of e-cigarettes aims to exploit. On the strategy of labelling and disclosure requirement, the main economic factor is how this requirement affects the cost of production and thereafter the price to the final consumers. The licensing of retailers dealing with e-cigarettes has led to the emergence of specialized vape shops geared towards setting up a unique retail environment. This has seen them promote skewed messages to consumers aimed at making their products more attractive which might increase the prevalence of the users (Counter Tobacco, 2018).
The main consideration under this aspect is now each strategy of the proposed policy plan affects different socio-demographics groups. A study in the South Korea indicated that the increase in cigarette prices cause a backlash from smokers. This was more prevalent among the low-income groups that indicated that the tax was inequality (Park, Nam, Lee, Hong, & Oh, 2018). Tobacco excise taxes has been considered to be regressive where low-income tobacco users pay a larger share of the income in taxes relative to higher-income individuals. However, a study indicated that the main effect of tobacco taxation is the progressive where low-income user’s consumer disproportionately more tobacco relative to the wealthier populations. This implies that the low-income users experience higher health benefits than their wealthier counterparts (Chaloupka, Yurkli, & Fong, 2012). In the labelling and disclosure requirement, a key issue of concern is whether the visual warning labels has similar impact across diverse racial/ethnic and social economic populations (Cantrell, Vallone, Thrasher, Nagler, Feirman, Muenz, He, Viswanath, 2013). A key social issue on the strategy of retailer licensing, is its use as a means of addressing the disparity on tobacco use and resulting health effects between the low-income neighborhood and high-income areas. This may lead to a situation of putting focus on one area at the expense of other regions.
Taxation of e-cigarette has faced numerous legal battles and is still expected to continue facing the same. Among the noticeable legal battle is East Coast Vapor v. Pennsylvania Department of Revenue were a petition was filed arguing the definition of tobacco products. The ruling indicated that there separately packaged components parts of e-cigarettes cannot be taxed under the Tobacco Products Tax Act. This is likely to affect the manner in which the taxation is effected (Needles, 2018). The laws on labelling and disclosure requirement may face legal opposition. Such was the case when the FDA suggested the use of more substantive warning labels for tobacco products. These were indicated by the court as unconstitutional and in violation to the First Amendment (Almasy, 2013). This indicates that the labelling and disclosure requirement has restriction in the amount of information that may be mandated. A key consideration in the use of retailer licensing is that it needs to be done in consideration with environment of other relevant laws. This puts a limit in the extent of the issues which this strategy may address.
A key direct cost that will be common for the three policy plan strategies is the costs for carrying out enforcements. The enforcements of the taxation will require the revenue authority to dedicate resources to support this program and ensure that the taxes are actually paid. On the strategy of retailer licensing, resources are required to be allocated to a different authority to carry out physical inspection to ascertain that all retailers are operating with a license and that concentration of the retailers in a given are do not exceed the required limit. In terms of labelling disclosure requirement, resources are also required to make the assessment on the products in the market and ensure that they are required disclosures are made. The three strategies require resources for running awareness campaigns to sensitize the public, users, producers, and retailers of the possible effects of e-cigarettes.
A key indirect cost that is likely to be incurred from the adoption of the three policy plans will arise from new initiatives by users to overcome the unavailability of the e-cigarettes caused by high prices, strict retailer laws, and labelling laws. The users are likely to seek other alternatives that will provide them with a means of smoking thereby reducing the public health impact that the strategies are designed to achieve. It has been indicated that about 55.4% of the adult smokers engage in legal activities that reduce the price of cigarettes. It is clear that smokers would seek other means, legal or otherwise to secure the product (Xu, Pesko, Tynan, Gerzoff, Malarcher, & Pechacek, 2013).
The three strategies proposed as part of the policy plans all aim at achieving the same goal. This thereby indicates that they may cost share on some functions to minimize the costs. The main function that may be cost shared is on the public awareness campaigns through informative campaigns and adverts. Another area that cost sharing might come in handy is on the carrying the inspections which can be jointly done to minimize on costs.
Almasy, S. (2013). FDA changes course on graphic warning labels for cigarettes. CNN. com, March, 20. Retrieved from: www.cnn.com/2013/03/19/health/fda-graphic-tobacco-warnings/
Atwater, P., Fradkin, N., Medeiros, E., Hamilton, J., Hagopian, A., & Halperin, A. (2015). E-Cigarettes and Public Health: Policy Option for Wanshington State. The Evans Scool Review.
Cantrell, J., Vallone, D. M., Thrasher, J. F., Nagler, R. H., Feirman, S. P., Muenz, L. R., … & Viswanath, K. (2013). Impact of tobacco-related health warning labels across socioeconomic, race and ethnic groups: results from a randomized web-based experiment. PLoS One, 8(1), e52206.
Chaloupka, F. J., Yurekli, A., & Fong, G. T. (2012). Tobacco taxes as a tobacco control strategy. Tobacco control, 21(2), 172-180.
Counter Tobacco. (2018). E-Cigarretes at the Point of Sale. Retrieved from https://countertobacco.org/resources-tools/evidence-summaries/e-cigarettes-at-the-point-of-sale/
Drummond, M. B., & Upson, D. (2014). Electronic cigarettes. Potential harms and benefits. Annals of the American Thoracic Society, 11(2), 236-242.
FDA. (2018). Labelling and Warning Statements for Tobacco Products. Retrieved from https://www.fda.gov/tobaccoproducts/labeling/labeling/default.htm
Golden, S. D., Ribisl, K. M., & Perreira, K. M. (2014). Economic and political influence on tobacco tax rates: a nationwide analysis of 31 years of state data. American journal of public health, 104(2), 350-357.
IVVA. (2017). Irish Comment on Budget 2018. Retrieved from http://www.ivva.ie/latest-news/ivva-comment-budget2018/
Needles, Z. (2018). Court: E-cigarettes-But Not Separate Components can be Taxed as Tobacco Products. Retrieved from https://www.law.com/thelegalintelligencer/2018/06/27/court-e-cigarettes-but-not-separate-components-can-be-taxed-as-tobacco-products/?slreturn=20180806232149
Park, M. B., Nam, E. W., Lee, H. L., Hong, K. S., & Oh, Y. (2018). Social phenomena following the tobacco tax increase in South Korea: Lessons and policy implications. TOBACCO INDUCED DISEASES, 16.
Rose, S. W., Barker, D. C., D’angelo, H., Khan, T., Huang, J., Chaloupka, F. J., & Ribisl, K. M. (2014). The availability of electronic cigarettes in US retail outlets, 2012: results of two national studies. Tobacco control, 23(suppl 3), iii10-iii16.
Sanders-Jackson, A., Tan, A. S., Bigman, C. A., Mello, S., & Niederdeppe, J. (2016). To regulate or not to regulate? Views on electronic cigarette regulations and beliefs about the reasons for and against regulation. PloS one, 11(8), e0161124.
Stoklosa, M., Drope, J., & Chaloupka, F. J. (2016). Prices and e-cigarette demand: evidence from the European Union. Nicotine & Tobacco Research, 18(10), 1973-1980.
Xu, X., Pesko, M. F., Tynan, M. A., Gerzoff, R. B., Malarcher, A. M., & Pechacek, T. F. (2013). Cigarette price-minimization strategies by US smokers. American journal of preventive medicine, 44(5), 472-476.
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