If cashed out, proceeds beyond the total of premiums paid would be subject to regular income tax, though that's usually a small amount in such small policies.
Quite unlike taxes on income that are paid no matter what, with a consumption tax individuals would be able to limit the amount of money handed to the government by virtue of spending less.
Even accounting for the cost of setting up a regulator and a fall in corporation taxpaid by the tobacco companies, the researchers estimated there was a large amount of extra taxtobe made.