The Tax Foundation announced on its blog that New York’s proposal to raise taxes on nicotine pouches and other reduced-risk products could discourage smokers from switching away from combustible cigarettes, since the plan would tax lower-risk alternatives at the same level as traditional tobacco.
The organization said this approach contradicts best practices in excise-tax design and may undermine public health goals. The Tax Foundation warned that New York’s planned increases to taxes on modern oral nicotine products and vaping devices “run counter” to best practices, because excise taxes should reflect relative harm. The group said raising taxes on products that are substantially less harmful than cigarettes could create “perverse incentives” that discourage smokers from switching to lower-risk alternatives, according to its official blog.
Several officials and business leaders have also voiced opposition to the proposed tax.
According to Spectrum News, Assemblywoman Michaelle Solages said, “Creating a new tax is not the correct way” to curb youth use and cautioned that it would burden low-income communities.
Paul Zuber, executive vice president of the Business Council of New York State, added that “if you increase it to the point of tobacco products, you’re also going to create a black market.”
Research has shown potential unintended consequences of high tobacco taxes in New York City. Rutgers Health researchers found that New York City’s high cigarette taxes have fueled illicit trade. In a 2023 survey of 252 littered cigarette packs across all five boroughs, only 16.6% had the required city tax stamp, down from 39.3% in 2011 and 23.7% in 2015. The study warned that this leakage reduces revenue, strains enforcement, and disadvantages compliant retailers.
The Tax Foundation is a nonpartisan tax policy research organization that publishes analysis of federal, state, and international tax systems, including budget proposals and excise-tax design… Its work frequently evaluates how tax structures affect incentives, compliance, and revenue stability—especially for highly taxed products where avoidance and illicit trade can undermine collections and policy goals according to its website.
