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Ecig Taxing Dilemma for EU

Politicians push for increased prices for ecig end users.

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Avid watchers of ecig current affairs hit meltdown this week as news broke of plans by the European Union to impose taxes on electronic cigarette products. But those with a long memory will recall news that this comes as no surprise; the European Commission (EC) has been looking into taxation for some time.

We covered the details back at the start of 2015, where journalists at the Financial Times exposed an EC document: “The European Commission is considering taxing ecigarettes in the same way as their traditional cousins in a move that would drastically increase the cost of the alternative smoking product and further hinder their take up.”

At the time, The Financial Times reported an anonymous source as saying: “There are no plans at present on the commission side to tax ecigarettes, but we are prepared to look at the issue in greater detail if this were to be considered a priority by EU member states.”

And ‘consider it’ they most certainly do.

If this story had previously managed to fly under the vaping radar, it certainly hit home with the advent of The Guardian’s story last week: “EU agrees to tax e-cigarettes at higher rate.” They wrote: “EU diplomats unanimously agreed a call for the European commission to prepare a legislative proposal by 2017, in a draft document seen by the Guardian that EU finance ministers will sign off at a meeting next Tuesday.”

In response to the news, one POTV forum member questioned: “I wonder what it is that the EU has against Ecigs?” “Their only grievance,” rejoins another, “is that they ain't got a sizeable slice of the pie yet.”

The problem for vaping advocates and ecig campaigners like Clive Bates is encapsulated in his 2015 article Fiscal Deaths Ahead, where he writes: “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.”

ASH’s Deborah Arnott agrees: “If the EU were to require member states to tax electronic cigarettes like tobacco products it would be seriously detrimental to public health. It would lead to increased prices and discourage smokers from switching. The forum members are correct in their observations about the Commission’s desire to have a slice of the electronic cigarette financial dividend.”

How much tax?

Well, if governments decide they wish to see parity with current taxation on traditional tobacco in order to balance out money lost from declining cigarette usage, it will be at least 57%. This would be added on top of the current VAT rate of 20% on all sales.

Dave Dorn, speaking on behalf of the New Nicotine Alliance, is unequivocal: “there should be no sin tax on ecigs.” 

Inevitably, calls have been made to support a vote to leave the European Union. UKIP’s Nigel Farage and Paul Nuttall both said that they are appalled by the proposals. Some may wonder why, if they are so opposed to this anti-ecig scheme, they didn’t campaign and vote against Article 20 when they had the chance. Likewise, a question remains as to whether the British government wouldn’t implement such a tax regardless of being in or out of the European Union so as to maintain an income stream?

The implications for raising taxes on vaping was also clear to Cynthia Cabrera, of the Smoke-Free Alternatives Trade Association, when addressing the issue in the Sacramento Bee recently: “Taxing ecigarettes will backfire on public health,” she writes. “The end result will only lead adults back to smoking cigarettes or force them to purchase products out of state or on the black market.”

And one only needs to look at the catastrophic effect raising tax to 80.5% had on the Italian vaping industry and vapers. Two thirds of vapers stopped using ecigs, most returned to smoking while hundreds of stores ceased trading. Despite this, the will across Europe and within the British Parliament appears to be to pay lip service to harm reduction while being more concerned about tax revenue. In or out, it is difficult to see a rosy future for electronic cigarettes.

Dave Cross avatar

Dave Cross

Journalist at POTV
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Dave is a freelance writer; with articles on music, motorbikes, football, pop-science, vaping and tobacco harm reduction in Sounds, Melody Maker, UBG, AWoL, Bike, When Saturday Comes, Vape News Magazine, and syndicated across the Johnston Press group. He was published in an anthology of “Greatest Football Writing”, but still believes this was a mistake. Dave contributes sketches to comedy shows and used to co-host a radio sketch show. He’s worked with numerous vape companies to develop content for their websites.

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