A proposed increase in consumption tax on electronic cigarettes in the Czech Republic has raised concerns about the impact it could have on smokers. The tax, part of a consolidation package, was ultimately softened after the government coalition disagreed. However, experts warn that even the compromise version could significantly increase the cost of e-cigarettes, leading consumers to return to traditional tobacco products.
According to a Think Tank Rational Policy study, most smokers would consider switching back to traditional cigarettes if e-cigarettes became significantly more expensive. Currently, 10 milliliters of e-cigarette liquid costs around 100 Kč, while a pack of cigarettes costs about 140 Kč. The government plans to gradually increase the price of e-cigarette liquid to 220 Kč over the next four years.
The study also warns that if e-liquids become more expensive than traditional cigarettes or heated tobacco, many users may choose to replace them with cheaper, more harmful products. This could pose a challenge to the government, which aims to “economically motivate smokers to switch to less risky alternatives,” according to the Action Plan for Addiction Area 2023-2026.
“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,” said Helena Gherasim, chairwoman of the Association of Providers of Addiction Services.
Experts stress the importance of making less harmful products more economically attractive to smokers. “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,” said Viktor Mravčík, an addiction expert from the National Institute of Mental Health. 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, argues that the proposed tax increase may not significantly impact e-cigarette users. “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,” he said.
The original proposal for the tax increase was 10 Kč per milliliter, which would have doubled the cost of e-cigarettes. The new proposal calls for a gradual increase in the tax, 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 debate around the tax increase highlights the importance of balancing economic motivation with the health risks associated with smoking. As the government seeks to incentivize smokers to switch to less harmful alternatives, it must carefully consider the impact of taxes and pricing on consumer behavior.