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Where will tax hikes and court rulings take the alternative tobacco market?

Countries can have very different opinions on what should be scientific matters when it comes to using tax to improve public health.

A recent example is the 2022 tax levied by German officials on heated tobacco that was recently upheld in a Court of Justice of the European Union (CJEU) ruling. The CJEU ruling was partly procedural, but the important part is that it confirmed it was OK for Germany to apply an increase to duties levied on heated tobacco sticks to bring them up to the equivalent of 80% of the tax applied to conventional cigarettes on public health grounds.

The CJEU said that “by adapting the tax system for heated tobacco, the specific purpose of that tax is to deter consumers who are dependent on nicotine from giving up cigarettes in favour of heated tobacco … since the latter product is also harmful to health”.

This is a somewhat surprising statement for the highest court in the EU to make. And it should be considered contentious. Not only does it equate harm from nicotine with harm from smoking, it also seems to suggest consumers should be deterred from moving from cigarettes to heated tobacco.

Both statements are scientifically demonstrably wrong. It could be argued – as US courts have done – that it is not in the CJEU’s remit to judge scientific accuracy in cases brought before it. But if the CJEU says that justifications for an increase in the duty on heated tobacco on public health grounds are permissible, then it should ensure the science backs that up.


Is it all really being done in the name of public health?

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    Questions linger on the remaining gap in duties between the two. If heated tobacco is as harmful to health as cigarettes, why not make the public health–oriented tax the same on both? Or if heated tobacco is less harmful, has the German government determined it to be 20% less harmful? If not, is the 80% of the equivalent rate figure arbitrary?

    The tax stands in contrast with the UK, where the proposed implementation of a duty on vaping products to deter young people and non-smokers from taking up vaping by making products less affordable and therefore less attractive (itself not without public health–benefit controversy) is at least joined by a tax increase on tobacco to maintain the relative price difference between the two products.

    In its justification for the increases, the UK government acknowledged that vaping had a role to play in smoking cessation and was therefore a potential net benefit to public health. Despite this, it is pressing ahead with plans to increase the price on vaping products, citing public health grounds. Public health experts worry this may send a mixed message and, even with the equivalent increase in tobacco duty, put some off switching.

    So for the UK perhaps a mixed message is better than an almost wholly negative message – as Germany seems to be putting forth for heated tobacco.

    – Freddie Dawson TobaccoIntelligence staff

    Photo: cdd20

    Freddie Dawson

    Managing editor, news
    Freddie studied at King’s College, London and City University and worked for publications including The Times, The Malay Mail, PathfinderBuzz and Solar Summary before joining the ECigIntelligence team. He has extensive experience in covering fast-moving consumer goods (FMCG), manufacturing and technological innovation.