Marisa Wojcik:
Welcome to Noon Wednesday. I’m Marisa Wojcik, a multimedia journalist with Here & Now on Wisconsin Public Television. So, with the passage of the state’s biannual budget, Wisconsin is now one of about 20 states that’s going to be taxing e-cigarettes, or they’re sometimes called vapor devices, and it’s set to start in October for Wisconsin. So, this trend is increasing as the trend for the popularity of these devices is increasing, and additionally, traditional tobacco is on the decline. So, joining us to talk about what all of this means is Mark Sommerhauser. He’s now with the Wisconsin Public — the Wisconsin Policy Forums, sorry. Thank you so much for being here.

Mark Sommerhauser:
Yeah, it’s great to be with you.

Marisa Wojcik:
So, we just talked about how Wisconsin is now one of 20 states, and that number 20 is hard to even quantify right now. Why is that?

Mark Sommerhauser:
That’s right. Because, in addition to Wisconsin, there are many other states that are passing taxes on these devices.

Marisa Wojcik:
In real time.

Mark Sommerhauser:
In real time, literally within the last few weeks. And so, there’s been, I believe, at least eight states just here in 2019 that have moved to adopt a new tax on e-cigarettes, and so that was definitely one of the challenges in doing this research, is that there is so much happening on this front right now.

Marisa Wojcik:
A moving target, you said.

Mark Sommerhauser :
Yeah, yeah.

Marisa Wojcik:
And is that because every other state is also putting it into their biannual budget?

Mark Sommerhauser:
Yes, that’s correct. And we’re seeing a variety of different approaches to taxing these devices, which is kind of another element of this. Different states are doing this in different ways.

Marisa Wojcik:
So your recent analysis showed that Governor Evers’s original proposal for the budget had Wisconsin taxing it at one of the higher rates of states, at about 35 million dollars, but he didn’t get what he originally asked for, so where did we end up?

Mark Sommerhauser:
Yeah, that’s right. So, the governor wanted to extend the state’s existing tax on non-cigarette tobacco products, like cigars and pipe tobacco. He wanted to extend that tax to e-cigarettes, and that was what he proposed as part of his budget proposal here at the beginning of the year. That would’ve been a 71% tax on e-cigarettes. So yeah, as you mentioned, that would’ve put Wisconsin near the top in terms of the tax raise among states for e-cigarettes. What we ended up instead was a much… far-reduced tax rate, five cents per milliliter of e-cigarette fluid.

Marisa Wojcik:
So it’ll be about five and a half million, is what you —

Mark Sommerhauser:
Correct, yes.

Marisa Wojcik:
–analyzed. And is that just because it’s less palatable for people as we’re kind of easing in to taxing these e-cigarettes?

Mark Sommerhauser:
Yeah, I’ll be honest, I didn’t see a lot from the members of the Join-Finance Committee, which is where that proposal was enacted, kind of explaining that. I think that the five cent per milliliter tax, as we mentioned in our report, is tied for the lowest rate among any other states; there’s four other states that also tax at five cents a milliliter. So, that kind of is where that figure comes from, and it is true that, I think it’s fair to say that the public health picture with e-cigarette taxation is more complicated than with traditional cigarettes. Where there’s more or less a consensus about how to tax traditional cigarettes, there’s a little bit more to think about, and it’s a little bit more of a mixed bag with e-cigarettes.

Marisa Wojcik:
And I’m going to get into a few questions about public health, ’cause your report goes into it. But, one thing that you did mention was that historically, Wisconsin has relied really heavily on tobacco tax, one of the most in states across the country, but you called this “volatile,” so why is it volatile?

Mark Sommerhauser:
Yeah, and I should say that that reliance has primarily been over the last, about 10, 11 years. There was a period in 2008 and 2009 where Wisconsin back-to-back increased its cigarette tax and went from having a not particularly high cigarette tax to having one of the higher cigarette tax rates in the country, and that is kind of what made this state more reliant than all but three other states on cigarette tax revenues. But, it has become a more volatile source of revenue because, since peaking in about, I think, 2010, the amount of revenue that the state has gotten from cigarettes has been steadily declining as, you know, as smoking rates have declined. And long-term that’s going to to be an issue for the state budget. And the nonpartisan Legislative Fiscal Bureau put out a revenue estimate here in May that basically revised the projections for cigarette tax revenues down even further and said, “Smoking rates are declining even more quickly “than we had anticipated, and as a result of that, “the amount of tax revenue that we get “is going to be even less than we thought.”

Marisa Wojcik:
And whether or not that’s intentional, higher taxes on cigarettes, which I think you said is something like two…

Mark Sommerhauser:
It’s $2.52 a pack.

Marisa Wojcik:
52 per pack, almost acts as a deterrent for smoking, so it’s kind of a double-edge sword: the more you increase that tax and increase that revenue, that more people are going to say, “Eh, I don’t want to buy that pack of cigarettes.” (chuckles)

Mark Sommerhauser:
That’s right. I mean, that’s absolutely part of the rationale behind it is that, particularly the public health community will point you to a lot of research that has demonstrated that high levels of taxation on cigarettes can incentivize people to either quit, or if they continue to smoke, at least smoke fewer cigarettes.

Marisa Wojcik:
So, do we know if these e-cigarettes are healthier or less harmful than regular cigarettes?

Mark Sommerhauser:
I think that — so, the first caveat is that e-cigarettes are much newer than traditional cigarettes, and so there’s not a comparable body of evidence and studies and data out there. The initial studies that have been done have suggested that e-cigarettes are definitely less harmful for your health than traditional cigarettes because of the carcinogens and things that are present in combustible cigarettes that aren’t in e-cigarette fluid. So, there is, I think, a credible amount of evidence, and there have been studies put out so far that point to that fact. So that is one thing to keep in mind for sure.

Marisa Wojcik:
But sometimes the behavior changes, you know, the overall harm. So you said that there’s an increase in, nationally, 50% more middle schoolers are smoking e-cigarettes and 78% more of high schoolers and smoking e-cigarettes. I know some people that sit inside and, instead of just having one every few hours, it’s just kind of a constant stream of smoking and so, we just don’t know how that data is going to shake out yet, right?

Mark Sommerhauser:
That’s right. And you really hit on, I think, the impetus for states to tax these devices beyond the obvious incentive of getting more tax revenue. There is an increasing alarm that’s developing in the public health community about, in particular, youth usage of e-cigarettes, and it is, by any measure, skyrocketing, just in the last few years as these devices become more prevalent and more accessible.

Marisa Wojcik:
They look like little flash drives.

Mark Sommerhauser:
Yeah, some of them do, and that’s one of the things that has really drawn the ire of the public health community is that they feel like some of these manufacturers have purposely made these devices not to look like vaping devices, but to look like something innocuous.

Marisa Wojcik:
And it’s interesting to note that a couple of the two most popular vaping devices, the Vuse and the JUUL, are owned by R.J. Reynolds and Philip Morris. So, very much traditional, old-school tobacco that is kind of bringing forth the new e-cigarette.

Mark Sommerhauser:
Finding a new product, yes, absolutely.

Marisa Wojcik:
So, on the flip side, your report talked about how vaping can sometimes be seen as a way to help adults who have been smoking regular cigarettes for their whole life kind of wean off of those, and potentially find a healthier avenue. So is that something that people are accepting as kind of a valid argument?

Mark Sommerhauser:
Yeah, that’s one thing that there’s, you know, anything you read in terms of research and studies emphasizes that there’s more research and study that needs to be done, but the sort of initial findings are that these e-cigarettes can be, in some cases at least, helpful in helping people either reduce their cigarette consumption, or in some cases, quit altogether. So that’s kind of what I meant earlier in saying that it is somewhat of a mixed bag. For young people, I think there’s a pretty broad consensus that we don’t want young people getting addicted to nicotine, and certainly not smoking combustible cigarettes, but for the people out there who are already habitual smokers of traditional cigarettes, there is some indication that e-cigarettes could possibly be helpful.

Marisa Wojcik:
And so then, potentially having higher and higher taxes makes those less and less accessible in order to try and help wean them off of those combustible cigarettes.

Mark Sommerhauser:
That’s right, that is the concern among people who would push back on sort of a high tax rate on these cigarettes, that’s right.

Marisa Wojcik:
And could it potentially have, if they are less harmful, depending on the behavior, could it have positive impacts on the healthcare community, on how much people are going in for certain lung diseases, or something like that?

Mark Sommerhauser:
Yeah, potentially. I mean, we know that there’s plenty of research out there that suggests that, for instance, that the fewer cigarettes that are consumed in a given area, there’s less spending on Medicaid, for instance, because of the lung problems and other things that are associated with cigarette smoking, as well as the fact that people who smoke cigarettes make up a larger share of the Medicaid population than the population as a whole. So, those are some examples of how that could tie into other things.

Marisa Wojcik:
Well, as two journalists who come from newsrooms, and back in the day, those used to be filled with smoke, it’s interesting to see how the debate has changed, but it’s still kind of similar.

Mark Sommerhauser:
Yeah, absolutely, absolutely.

Marisa Wojcik:
Well, Mark, thank you so much for being here and having this conversation.

Mark Sommerhauser:
Yeah, good to be with you.

Marisa Wojcik:
For more from Here & Now and Wisconsin Public Television, you can visit wpt.org, and thank you so much for joining us on Noon Wednesday.