Lower Taxation on Heated Tobacco Products Benefits Tobacco Industry at Public Expense

Recent research from the University of Bath has uncovered that governments reducing taxes on heated tobacco products (HTPs) to promote smoking cessation are inadvertently subsidizing the tobacco industry. This policy approach not only diminishes potential tax revenues but also hampers public health efforts. The study, published in the BMJ, analyzed the impact of tax reforms in Ukraine, where specific tobacco taxes were applied equally to both traditional cigarettes and HTPs.

Unlike conventional cigarettes, which involve burning tobacco, HTPs heat tobacco to produce an inhalable aerosol, offering a similar experience with the perception of being a less harmful alternative. As demand for HTPs rises globally, many countries impose lower taxes and regulation on these products, a strategy exploited by tobacco companies to maintain profitability.

The researchers found that in Ukraine, despite changing tax policies, the retail prices of HTPs remained static, leading to increased profit margins for tobacco companies. Dr. Zaineb Sheikh from the university’s Tobacco Control Research Group explained that tobacco companies position HTPs as premium products, and lower taxes effectively act as a subsidy, boosting profits while depriving the government of vital tax income.

Their study, titled "Examining cigarette, heated tobacco, and e-cigarette market pricing and tax passthrough in Ukraine during the 2019-2022 tax reforms," highlights how the industry adapts pricing strategies to mitigate tax impacts. While traditional cigarette sales decline, HTP and e-cigarette sales surged — HTPs saw a 278% increase from 2019 to 2022, signaling a shift in consumer preferences towards these less regulated products.

Despite industry claims that HTPs are safer and could aid in smoking cessation, recent research questions these assertions. A separate study from the same group indicated inconclusive health benefits and emphasized that the long-term health effects of HTPs remain uncertain. Experts like Dr. Rob Branston suggest that inconsistent global taxation policies enable tobacco companies to circumvent public health objectives, underscoring the need for uniform taxation aligned with WHO recommendations.

Overall, the findings suggest that lower taxes on HTPs not only enable tobacco companies to maximize profits but also undermine efforts to reduce smoking prevalence and improve public health. Policymakers are urged to consider re-evaluating tax strategies to prevent industry exploitation and to promote a healthier society.

Source: https://medicalxpress.com/news/2025-05-taxes-tobacco-products-subsidizing-industry.html