Base Tobacco Taxes on Tobacco Risks – A Valid Strategy Is Revived

On August 13 the New England Journal of Medicine published a commentary (here) by three prominent tobacco research and policy experts challenging “national, state, and local policymakers” to “expedite the move away from cigarette smoking” by basing tobacco taxes on health risks.  They recommend high taxes on high-risk combustible products, and lower taxes on low-risk smoke-free products like e-cigarettes and smokeless tobacco. 

Economist Frank J. Chaloupka of the University of Illinois Chicago, attorney David Sweanor of the University of Ottawa and economist Kenneth E. Warner of the University of Michigan acknowledge that “the science supporting a difference in risk between combustible and noncombustible tobacco products is well established,” and they conclude that “Sizable public health benefits could derive from current cigarette smokers’ switching to [e-cigarettes] and other noncombustible products.”

I made the same argument in a Tampa Tribune op-ed on August 16.  12 years ago.

In 2003, many states were under pressure to raise tax revenues.  I submitted op-ed columns to newspapers in 16 states, noting: “Excise taxes on tobacco products may be inevitable, but they don’t have to be illogical.  A common sense approach is to tax tobacco products according to risk.  Cigarettes, widely acknowledged as the most dangerous products, are already taxed at high levels by most states, ostensibly to discourage consumption.  But the health impact of smokeless tobacco use is much lower; scientific and medical research has confirmed that smokeless tobacco use carries only about 2% of the risk of smoking.  A rational tobacco tax policy would set taxes on smokeless products at 2% those of cigarettes.” 

The Tampa Tribune published my proposal (click on the image to read it), which included this:

“Taxing tobacco products according to well-established risks will serve the public health goal of reducing the death toll from cigarette smoking.  Economic research shows that a large price differential encourages cigarette smokers to switch to smokeless tobacco.  A growing number of public health experts, including the prestigious Royal College of Physicians in Britain, recognize that smokeless tobacco may be an acceptable substitute for smokers who have been unable or unwilling to quit.  They point to evidence from Sweden where, over the past century, men have smoked less and used more smokeless tobacco than in any other Western country.  The result: Swedish men have the lowest rates of lung cancer -- indeed, of all smoking-related deaths -- in the developed world.

“How have the Swedes achieved this record-setting reduction in smoking?  First, placing tobacco discreetly inside the mouth is far safer than setting it on fire and inhaling the smoke, and the Swedes know it…Second, smokeless tobacco satisfies, because it delivers nicotine almost as efficiently as a cigarette.  Nicotine is addictive, but it causes none of the diseases associated with smoking.  Third, the “spitting image” of smokeless tobacco is history, because modern products, available in Sweden and the US, can be used invisibly and as easily as breath mints.  Finally, in Sweden the price of smokeless tobacco products is less than half that of cigarettes, the difference largely reflecting levels of taxation.”

Twelve years later, it is comforting to see this taxation strategy gaining wider currency.