Tobacco and nicotine taxation: the limits of preferential taxation

An article published on the International Monetary Fund (IMF) website argues that governments should make greater use of taxation to reduce the financial and health damages associated with the consumption of harmful products (tobacco, alcohol, sugar, etc.). While this general recommendation aligns with those of health professionals, the article's authors urge policymakers to grant preferential tax treatment to new tobacco and nicotine products, contrary to the findings of the scientific literature.

The authors' stated objective is twofold: to optimize tax revenue and maximize the health benefits associated with taxes. To this end, they propose an approach based on three principles: taxing all harmful products, adjusting taxation according to the potential risks of each product, and limiting illicit trade.[1]. However, it is necessary to clarify that this article, which incorporates some arguments from the tobacco industry, does not necessarily reflect the IMF's position on the subject.

Confusion between new tobacco and nicotine products

According to the authors of the article, new tobacco and nicotine products (electronic cigarettes, heated tobacco, nicotine pouches) allow for "« responding to people who are unable to break this habit [of smoking] »However, such an assertion appears questionable on several levels. First, it tends to conflate products of very different natures, whose health risks vary considerably. Second, such a statement suggests that the rapid emergence of these new products is the result of growing demand from smokers, circumventing the aggressive marketing practices of manufacturers to expand their tobacco and nicotine offerings. Finally, associating tobacco with a "« habit »" amounts to euphemizing and normalizing a product that is powerfully addictive, at levels equivalent to those of heroin.

The risks of differentiated taxation for tobacco products

The article argues that new products, less harmful than traditional tobacco, should benefit from preferential taxation to encourage smokers to switch to these alternatives.« less harmful »According to the authors, the development of new products reduces consumer exposure to toxic substances. In reality, this assertion is based on a literature review conducted with financial support from the Foundation for a Smoke-Free World (now known as "« Global Action to End Smoking »"), a scientific disinformation organization funded exclusively by Philip Morris International. Furthermore, a reduction in exposure to toxic substances does not automatically lead to a reduction in risk of the same magnitude.

If the electronic cigarettes While recognized as less harmful than combustible tobacco, the French Agency for Food, Environmental and Occupational Health & Safety (ANSES) reiterates the lack of long-term data to assess the consequences of chronic exposure. Regarding heated tobacco, the current state of scientific literature does not allow for a conclusion regarding a "« reduced risk »", but more to a "« modified risk »Finally, public health stakeholders argue that the taxation of these new products should not be guided solely by the levels of exposure to the toxic substances they induce. Indeed, tax policies must also take into account the risk that the proliferation of these new products poses to the spread of the nicotine epidemic, particularly among young people.

A mechanistic view of the emergence of illicit trade

The authors of the article nevertheless warn of the risks associated with tax policies:« a simple increase in rates will not be enough No: sooner or later, smokers […], rather than quitting, will turn to illicit alternatives […] »In reality, independent research rejects the idea of a correlation between tobacco product taxation levels and the extent of the illicit trade. In France, the public data They point out that parallel tobacco markets are stable (11 to 20% of national consumption), and essentially consist of legal cross-border purchases.

FT

[1] International Monetary Fund, Taxes on smoking, drinking, and sugar should better align with the harm they cause, March 2026, (accessed 24/03/2026)

National Committee Against Smoking |