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In today’s newsletter:
Why do unelected World Health Organisation officials influence our regulations?
The Welfare State Myth
2025 Budget Briefing: The Fiscal Context
2025 Budget Briefing: Tax Policy Preview – Options and Possible Impacts
What are the Chancellor’s options?
Last week saw the World Health Organisation hold its biennial anti-nicotine conference in Geneva. With the unwieldy title of the Framework Convention on Tobacco Control (FCTC) Conference of the Parties, it used to be an anti-tobacco meeting but the WHO is now explicitly at war with what it calls the “nicotine industry” [ [link removed] ]. There is no economic or moral justification for using state coercion to pursue a “nicotine-free world” [ [link removed] ], and there are strong health arguments for allowing low-risk nicotine products to displace cigarettes. What we are seeing is turbo-charged mission creep and a classic example of Not Invented Here Syndrome. [ [link removed] ]
My colleague Reem Ibrahim and I were in Geneva as guests of the Taxpayers Protection Alliance who were running an alternative conference [ [link removed] ] promoting tobacco harm reduction. Vapes, pouches and other low-risk nicotine products are fantastic examples of free market solutions to a health issue, but they are increasingly being suppressed by misguided governments, with the blessing of the WHO and under pressure from a network of lobby groups [ [link removed] ] funded by Michael Bloomberg.
It takes a courage to stand up for harm reduction in the hostile environment of a WHO conference, but that’s what the New Zealand delegation did. They have a great story to tell. Since legalising and regulating e-cigarettes a few years ago, their daily smoking rate has fallen to 6.8%, one of the lowest in the world. They are now planning to legalise nicotine pouches and snus to encourage the remaining smokers to quit. Far from being congratulated on their success, New Zealand was awarded the ‘Dirty Ashtray’ award [ [link removed] ] by the Framework Convention Alliance “for trying to portray their current tobacco control plan as a success when in reality since COP10 they’ve reversed world-leading reforms”. The WHO is particularly annoyed that New Zealand repealed its generational cigarette sales ban which the UK now has the dubious honour of introducing first. While New Zealand was named and shamed in Geneva, Mexico was given the Orchid Award for outstanding achievements in tobacco control because its delegation made a rousing speech against the tobacco industry. Mexico is in the WHO’s good books because it banned e-cigarettes. Its smoking rate has been drifting upwards in recent years.
Welcome to the looking-glass world of modern “public health” where countries with the lowest smoking rates are treated like pariahs while countries are praised for introducing counter-productive but ideologically approved policies. Intentions mean everything and outcomes mean nothing.
Like New Zealand, the UK delegation has a good story to tell, but they failed to tell it. Instead, they paid homage to what the WHO calls “forward-looking measures” [ [link removed] ] - a euphemism for prohibition. Vaping has helped bring down Britain’s smoking rate to one of the lowest in Europe and we are still considered by many to be world-leaders in tobacco harm reduction, but that is set to change with the Tobacco and Vapes Bill and the forthcoming vape tax. The UK’s failure to follow through on its successful, liberal approach to reduced-risk products is a dereliction of duty and sets a poor example to the rest of the world.
Chris Snowdon
Head of Lifestyle Economics
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IEA Podcast: Managing Editor Daniel Freeman is joined by Editorial Director Kristian Niemietz and Julian Jessop about the upcoming autumn budget and Britain’s fiscal challenges — [ [link removed] ]IEA YouTube [ [link removed] ]
In the week before the budget, we’ve published three pieces of research. The first, “The Welfare State Myth”, argues that low-tax countries often have better welfare outcomes. The second, “2025 Budget Briefing: The Fiscal Context”, argues that Britain’s long-term fiscal crisis is driven by spending growth that has consistently outstripped both demographic demand and economic expansion. The third, “2025 Budget Briefing: Tax Policy Preview – Options and Possible Impacts”, argues that we are likely to see a ‘dog’s breakfast’ of tax rises to come to fill the £30 billion budget hole.
Certainly some food for thought for the Chancellor…
The Welfare State Myth
by Nima Sanandaji and Stefan Fölster
Low-tax countries now dominate welfare quality rankings while high-tax nations struggle, new analysis shows
Britain has suffered a catastrophic decline in welfare performance, falling to 22nd place in life expectancy and ranking just 15th overall despite a record tax burden and ballooning welfare spending
The Nordic model has collapsed as a welfare benchmark with Sweden plummeting from 1st to 8th in life expectancy as its tax burden soared to 43% of GDP
Shadow Chancellor Sir Mel Stride: “This report offers a timely reminder that higher taxes, higher spending and higher welfare are not the route to a fairer, more prosperous economy.”
Richard Tice: “This research confirms what we’ve known all along.”
The top-performing countries on welfare outcomes are low-tax Switzerland, Japan, and South Korea
The Truth About Scandinavian “Socialism” | IEA Interview, Head of Media Reem Ibrahim interviews Nima Sanandaji, IEA YouTube [ [link removed] ]
Debunking the great welfare myth [ [link removed] ], [ [link removed] ] Head of Media Reem Ibrahim writes for CapX [ [link removed] ]
If we want better welfare in Britain, that is, better education, better healthcare and better standards of living, we must challenge one of the most deeply ingrained assumptions in our politics. You do not achieve ‘more’ by taxing more. In fact, the opposite is usually the case.
Rachel Reeves, there is only 1 thing you can do to stop bleak future for Britain, [ [link removed] ] The Daily Express [ [link removed] ]
On the eve of the Chancellor’s second budget [ [link removed] ] next week, it’s blindingly obvious that taking more and more of our money does not ensure better services. The Institute of Economic Affairs analysis reveals that a once enviable country like Sweden has plunged from first place to eighth in terms of life expectancy while its tax burden has leapt to 43% of GDP. Britain has fallen even further to 22nd place in life expectancy, despite our record tax burden, while Switzerland with a private health insurance system has superior health outcomes.
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2025 Budget Briefing: The Fiscal Context
by Tom Clougherty
Chancellor Rachel Reeves faces £30 billion ‘fiscal black hole’ by 2029-30, requiring tax rises or spending cuts to meet fiscal rules
Taxing the rich cannot bridge the gap – each 1p rise in the top income tax rate raises just £145 million in the next year, and capital gains tax hikes would be economically self-destructive
Public spending has grown 2.5% per year in real terms since 1997, far outstripping population growth of 1% per year and economic growth of 1.8% per year
Without policy change, public spending on over-65s would increase by 11 percentage points of GDP
2025 Budget Briefing: Tax Policy Preview – Options and Possible Impacts
by Julian Jessop
Chancellor Rachel Reeves will likely fill the gap with broad-based income tax increases and a ‘dog’s breakfast’ of smaller measures
Root cause is spiralling public spending – not productivity downgrades or economic shocks
Tax revenues from multiple small changes are unreliable compared to simpler increases in income tax or VAT
Budget 2025 Forecast: Why Rachel Reeves’ Tax Plan Will Backfire, [ [link removed] ] Managing Editor Daniel Freeman interviews Economics Fellow Julian Jessop, IEA YouTube [ [link removed] ]
News and Views
Head of Media Reem Ibrahim discussed inflation on LBC [ [link removed] ]
“Inflation is still well above the Bank of England’s 2% target. As prices increase at a much faster rate than people’s wages, that money is being eaten away—having a huge impact on the cost of living.”
Borrowing overshoot shows current ‘fiscal headroom’ is not enough, [ [link removed] ] Economics Fellow Julian Jessop quoted in BusinessMoney [ [link removed] ]
Commenting on this morning’s borrowing figures, Julian Jessop, economics fellow at the free market think tank the Institute of Economic Affairs, said: “The latest bad news on the public finances will increase the pressure on the chancellor to raise the ‘fiscal headroom’ in next week’s Budget. This should provide a bigger buffer against future shocks. Unfortunately, it is likely to mean that the tax increases are bigger too.
Free Speech is Not Right or Left | Jacob Mchangama | IEA Podcast, Managing Editor Daniel Freeman interviews Jacob Mchangama, IEA YouTube [ [link removed] ]
There’s no justification for fat taxes in the age of Ozempic [ [link removed] ], [ [link removed] ]Public Policy Fellow Matthew Lesh, The Telegraph [ [link removed] ]
In the not-too-distant future, as these weight loss drugs become more accessible and even more effective, obesity could very well disappear as a major public health challenge. In the meantime, we should be free to enjoy our milkshakes in peace. The boys will still come to the yard – just a little lighter.
What is Scarcity? Episode 2 | Economics 101 [ [link removed] ], [ [link removed] ] Education Fellow Steve Davies, IEA YouTube [ [link removed] ]
Moralism posing as economics, [ [link removed] ] Head of Lifestyle Economics Chris Snowdon, The Critic [ [link removed] ]
The anti-gambling campaigner, former Corbyn advisor and Polanksi admirer Matt Zarb-Cousin [ [link removed] ] responded to Sky Bet’s departure by advising the government to “offset this loss of corporation tax by hiking remote gaming duty to 50 per cent”, a rate that would not only lead to the whole sector operating offshore but would make their UK websites unviable. “Good riddance”, some will say. Zarb-Cousin makes no secret of the fact that he wants to tax online casinos to be “into oblivion” [ [link removed] ]. If you are on a moral crusade to get rid of the rich and drive gambling companies out of Britain, taxation is a good way to go about it, but let’s not pretend that this is about raising revenue.
Head of Media Reem Ibrahim appeared on BBC 5Live [ [link removed] ]
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