Discussions about nicotine regulation often become polarized. Some policymakers argue that all nicotine products should be treated similarly because they contain an addictive substance. Others argue that regulation should reflect differences in risk between products.
A recent analysis from the International Monetary Fund (IMF) offers an important contribution to this debate.
Published in Taxing Harmful Habits (2026), IMF economists Christoph B. Rosenberg and Marius van Oordt argue that taxation and regulation should be aligned with the degree of harm products are likely to cause. Their analysis draws on toxicological assessments from Murkett et al. (2022) and includes one of the clearest illustrations yet of the relative risk spectrum across modern nicotine products.
The chart places combustible cigarettes at the highest end of the harm continuum, alongside other smoked tobacco products. At the opposite end sit nicotine replacement therapies and nicotine pouches, which are associated with substantially lower levels of potential harm. Heated tobacco products and e-cigarettes also fall significantly below combustible tobacco products on the spectrum.
This is noteworthy not because it introduces a new concept, but because it comes from a major global economic institution rather than from within the nicotine policy debate itself.
The IMF’s conclusion is straightforward: products that reduce exposure to toxicants compared with traditional cigarettes should be treated differently within taxation frameworks. As the report notes, many alternative nicotine products reduce toxicant exposure relative to smoking, making it sensible to apply lower tax rates than those imposed on combustible cigarettes. The report further highlights New Zealand as an example of how taxation differentials may encourage movement away from smoking toward less harmful alternatives.
Importantly, the IMF analysis does not suggest that nicotine products are risk-free. Rather, it recognises that there are meaningful differences in risk across product categories. This distinction is critical.
Too often, policy discussions collapse all nicotine products into a single category, creating the impression that cigarettes, nicotine pouches, nicotine replacement therapies, heated tobacco products, and e-cigarettes pose similar levels of harm. The available evidence does not support that assumption.
The primary driver of smoking-related disease is combustion. Cigarette smoke contains thousands of chemicals, including numerous known carcinogens and toxicants generated through burning tobacco. Non-combustible products eliminate combustion entirely. While they may still present risks and warrant regulation, they do not expose users to the same toxicological profile as cigarettes.
This is why risk-proportionate regulation matters.
A risk-proportionate framework does not mean deregulation. It does not mean unrestricted marketing, unlimited product access, or weak youth protections. Instead, it means that regulatory measures should reflect relative risk. Products associated with the highest levels of harm should face the strongest restrictions, while lower-risk alternatives for adults who smoke should not automatically be regulated as though they carry cigarette-level risks.
The IMF report also highlights a broader challenge facing governments. As new nicotine products emerge, taxation and regulatory systems must evolve accordingly. Applying the same rules across fundamentally different products may appear simple from an administrative perspective, but it risks creating incentives that are inconsistent with public health objectives.
If combustible cigarettes remain widely available while lower-risk alternatives face equivalent restrictions, taxation burdens, or outright bans, policymakers should carefully consider whether those approaches are aligned with the goal of reducing smoking-related disease.
The significance of the IMF analysis lies not only in its conclusions but also in its source. A major international economic institution has explicitly recognised that nicotine products are not equally harmful and that policy frameworks should account for those differences.
For regulators, this reinforces an increasingly important principle: public health policy should focus not only on whether products contain nicotine, but on the degree of harm they are likely to cause.
As governments continue to review taxation, product standards, and market access rules, the question is becoming harder to avoid.
Should all nicotine products be treated the same, or should regulation reflect the growing body of evidence showing that some products pose substantially lower risks than others?
The IMF’s contribution suggests that risk-proportionate approaches deserve serious consideration.
