A proposed increase in consumption tax on electronic cigarettes in the Czech Republic has sparked concerns about its potential impact on smokers. While originally part of a consolidation package, the tax faced opposition within the government coalition, resulting in a softened version. Nonetheless, experts caution that even the compromise version could significantly raise the cost of e-cigarettes, potentially driving consumers back to traditional tobacco products.

According to a study conducted by the Think Tank Rational Policy, a majority of smokers would contemplate returning to traditional cigarettes if e-cigarettes became considerably more expensive. Currently, 10 milliliters of e-cigarette liquid cost approximately 100 Kč, while a pack of cigarettes is priced at about 140 Kč. The government’s plan is to gradually increase the price of e-cigarette liquid to 220 Kč over the next four years.

The study also highlights that if e-liquids become pricier than traditional cigarettes or heated tobacco, many users may opt for cheaper, more harmful products, potentially challenging the government’s aim to “economically motivate smokers to switch to less risky alternatives,” as outlined in the Action Plan for Addiction Area 2023-2026.

Helena Gherasim, Chairwoman of the Association of Providers of Addiction Services, noted, “According to the survey, higher prices of alternative tobacco and nicotine products would put users in a position to choose between finance and health. Lower price is important for 22 percent of e-cigarette users, while for 13 percent of heavy users, it is the main reason.”

Experts emphasize the importance of making less harmful products economically appealing to smokers. Viktor Mravčík, an addiction expert from the National Institute of Mental Health, stated, “To make this work, smokers not only have to be able to replace smoking from a psychological and biological point of view, but the products also have to be more economically attractive.” He added that “higher prices of e-cigarettes could mean that a significant number of users will start to prefer cheaper, more harmful products.”

However, Adam Kulhánek, another addiction expert, suggests that the proposed tax increase may not significantly affect e-cigarette users. He explained, “It depends on how the price is set, but e-cigarette users account for about five percent in the Czech Republic, while heavy smokers account for 24 percent, and we should primarily focus on this group. I think it is rather an argument to support the industry with replacements.”

The original proposal for the tax increase was 10 Kč per milliliter, effectively doubling the cost of e-cigarettes. The revised proposal calls for a gradual tax increase, starting with 2.5 Kč per milliliter in the first year, 5 Kč in the second year, 7.5 Kč in the third year, and 10 Kč per milliliter in the fourth year.

The ongoing debate around the tax increase underscores the need to strike a balance between economic incentives and addressing the health risks associated with smoking. As the government aims to encourage smokers to transition to less harmful alternatives, it must carefully consider the impact of taxes and pricing on consumer behavior and public health.

Article by Prague Forum