FCTC: Combustible tobacco products should be taxed at higher levels than ENDS

Participants at the Sixth Conference of the Parties (COP) to the Framework Convention on Tobacco Control held in Moscow in October 2014 invited the World Health Organization to prepare a report on Electronic Nicotine Delivery Systems (ENDS) and Electronic Non-Nicotine Delivery Systems (ENNDS) for the seventh session of the COP to be held in Delhi, India in November 2016. The WHO issued its findings in August 2016 and although the report falls short of endorsing ENDS/ENNDS as aides in smoking cessation it contains some points of interest to fiscal policymakers.

Previously, the WHO has been skeptical of the possible benefits that ENDS could bring to reducing the harm incurred by smoking. At times, it seemed that the WHO regarded the vaping trend as an obstacle to its goal of eradicating tobacco use, rather than a potential tool. In the meantime many in the public health community, such as Public Health England and the Royal College of Physicians, have concluded that electronic cigarettes are significantly less harmful than tobacco products that are burnt.

In this study prepared for the COP7 the WHO fails to embrace ENDS with much enthusiasm. The devices could contribute to public health if the vast majority of smokers switched to ENDS immediately and eventually stopped using them altogether. Non-smokers, including minors, would enter the nicotine dependent population via ENDS at rates less than those who take up smoking and initiation would decline to zero. These are high bars to meet WHOS’s approbation.

Nevertheless, the WHO provides some faint praise of ENDS. It acknowledges that the “number and level of known toxicants generated by the typical use of unadulterated ENDS/ENNDS is on average lower or much lower than in cigarette smoke”. It further recognizes that given the levels and numbers of toxicants typically produced by ENDS/ENNDS, “it is very likely that ENDS/ENNDS are less toxic than cigarette smoke.” Frequently, a series of caveats and demands for further research follow such statements.

The limited body of empirical research on the topic shows that ENDS/ENDS sales and prices have a strong inverse relation. It is understandable that despite the potential health benefits of switching from cigarettes to ENDS/ENNDS consumers may show reluctance to pay more for a new product category. The WHO concludes that “differential tax policies based on product type could lead to substitution between types of ENDS/ENNDS and between ENDS/ENNDS and cigarettes.” Tax driven price gaps can provide smokers an incentive to switch to lower priced END/ENNDS products.

Clearly, a major objective of the WHO’s tax policy with respect to ENDS/ENNDS is to make them unaffordable to minors. This is a narrow focus on just one aspect of the broader question of risk reduction. If governments use taxes to force prices of these devices higher a potential public health benefit from switching will be sacrificed.