PDNW Welcomes Israel’s Vape Tax U-Turn, Warns Against Punitive Tax on Nicotine Pouches

Prohibition Does Not Work (PDNW) has welcomed Israel’s proposed reduction in excise taxes on vapour products, calling it an important recognition that excessive taxation drove consumers into the black market rather than protecting public health.

PDNW warned, however, that the proposed tax hike on nicotine pouches would repeat the same mistake with one of the lowest-risk nicotine alternatives available.

“Israel deserves credit for recognizing that punitive vape taxes failed,” said Tim Andrews, Global Spokesman for Prohibition Does Not Work. “The proposed reduction in vapour taxes shows that policymakers understand a basic reality: when legal reduced-risk products are taxed beyond the point where lawful businesses can compete, consumers do not disappear. They move to the black market. That same logic must now be applied to nicotine pouches.”

Nicotine pouches are tobacco-free and smoke-free products that avoid exposure to tar and the toxic byproducts of combustion. For adult smokers who do not quit nicotine entirely, they are among the least harmful available alternatives.

“Tax policy should reflect relative risk,” Andrews said. “Nicotine pouches are not cigarettes and should not be taxed as though they are. Making safer alternatives more expensive protects the cigarette market, fuels illicit trade, and makes it harder for smokers to switch.”

PDNW’s submission also warned that illicit tobacco and nicotine markets can strengthen organized criminal networks, including smuggling operations of particular concern in the Middle East.

“For Israel, this is not only a tax question. It is a law enforcement and national security question,” Andrews said. “Creating a large price gap between legal and illicit products risks strengthening exactly the kind of illegal supply chains Israel has every reason to suppress.”

PDNW urged the Ministry of Finance and Israel Tax Authority to support the proposed reduction in vapour product taxation while reconsidering the proposed tax increase on nicotine pouches.

You can download the full submission here.

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