Tobacco control activists and academics are gathering in Cape Town for the World Conference on Tobacco or Health 2018 (#WCTOH2018). High on the agenda is the role of the tobacco industry and how to fight it (e.g. see this session:”Breaking Big Tobacco’s Grip“).
In a guest posting below, David Sweanor provides an alternative perspective they are unlikely to hear discussed much at their conference.
European Commission consultation: the Commission is consulting on applying excise duties (i.e. tax) to vape products and other reduced risk alternatives to smoking – see here for consultation page with online form for interested parties to complete – please do add your response.
There is no case on principled or practical grounds to apply excise duties to vaping products and other products that offer a much safer alternative to smoking. The value to health and wellbeing associated with switching from smoking to vaping will exceed any benefits arising from revenue collection.
Note from Counterfactual. There’s much speculation and theorising from public health academics about what the tobacco industry is doing and what motivates it. But this often based on a simplistic understanding of business, markets and how the industry (indeed any industry) works, and seasoned with selective reading of now-dated industry documents. I thought we might gain more by asking an analyst and investor for his views. So here is a guest post from Jonathan Fell, a former City of London investment bank equity analyst with over 20 years’ experience following the tobacco industry and other consumer packaged good companies. He now manages a fund, in which he himself invests, that owns shares in a number of consumer companies, including tobacco stocks.
These are Jonathan’s own views. This piece is not intended as investment advice, nor should it be taken as such.
________ Jonathan Fell’s guest blog starts here ________
(1) E-cigarettes: The potential to transform the tobacco industry. Imagine a product that is possibly >99% less harmful than cigarettes, delivers a similar use experience and offers a better economic bargain— this is the proposition of electronic cigarettes (e-cigs). We believe e-cigs have the potential to alter the status quo of the US tobacco market and accelerate the volume decline of traditional cigarettes.
But what does the academic literature tell us about regulating disruptive new technologies like e-cigarettes, heated tobacco products or novel nicotine products? If you want to get beyond zealous proposals for outright bans, crude restrictions and gratuitous burdens you will need to bypass the health journals and consult scholarship in academic law journals. Here are three paper that offer useful insights – none deal explicitly with tobacco or nicotine. Sadly, there is little sign that these insights have been grasped by FDA, the European Union or WHO. Continue reading “Regulating disruptive technologies – three papers”
… in this world nothing can be said to be certain, except death and taxes
He probably didn’t envisage deliberately causing death by carelessly designing taxes. But to my surprise and dismay, that seems to be the idea of the public health establishment of United States. I saw this story today:
What if basic economics tells you that raising a tax on a newer, much safer, product will lead to more consumption of an older much more dangerous product than there would otherwise be? What if the consequence of that tax was to cause more cancer, heart disease and emphysema, and to cause more people to die prematurely? Would you raise that tax? Would you knowingly cause ‘fiscal deaths’?
The investment analysts are always interesting on tobacco and e-cigs, and in a usefully dispassionate ‘follow-the-money’ kind of way.
Here’s a small collection of quotes I’ve seen in recent analyst reports mainly as they relate to regulation of e-cigarettes. I don’t see all reports of course so this is necessarily selective. For ease of reference, I have highlighted some parts of quotes in red – these are my emphasis. The bold emphasis is in the original.
Imagine your job is taking huge gambles with other people’s savings and pensions. Imagine also that the bets are arranged so that you are paid a fortune when things turn out well, but you don’t lose anything much when they go wrong. How would you behave…?