New Vape Tax to Triple E-Liquid Prices in Germany
As the German Ministry of Finance first released the draft measure last February, the law will take effect on July 1, 2022, marking the first tobacco tax update in ten years. Sadly, the amendment will cause safer alternatives to be taxed the same as regul
With the German Ministry of Finance first releasing the draft of this measure last February, the law will come into effect on July 1, 2022, marking the first update to tobacco taxes in a decade.<\/span><\/div>
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Sadly, this amendment will tax safer alternatives the same as regular tobacco products. Starting from 2022 and continuing into 2023, nicotine-containing products will be taxed at 0.02 euros per milligram of nicotine alkaloid, increasing to 0.04 euros per milligram by 2024.<\/span><\/div>
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This means that the measure will significantly increase taxes on e-liquids, tripling prices, while only moderately increasing taxes on regular cigarettes. Michael Landl, director of the World Vapers Alliance (WVA), stated that these taxes will ultimately have the opposite effect of what is intended.<\/span><\/div>
“The government claims these taxes will improve public health, but the reality is quite the opposite. As a less harmful alternative, e-cigarettes must be more affordable than smoking to encourage smokers to quit. If governments want to alleviate the public health burden of smoking, they must make smoking easier to afford and access, not less so.<\/span><\/div>
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Additionally, the Liberal and Green opposition parties, along with the German Police Union, pointed out that high taxes will only provide a starting point for “smugglers and counterfeiters,” with the German Customs Union (BDZ) stating that such taxes will only feed the black market. “Due to the enormous tax burden on liquids, a tax-avoiding black market will inevitably form.”<\/span><\/div>
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Increasing taxes on safer alternatives will raise smoking rates.<\/span><\/div>
In line with these arguments and numerous research findings, a recent study by the National Institutes of Health indicated that raising e-cigarette taxes to curb their use is indeed counterproductive. The study found that such taxes only lead former smokers to revert to traditional (more harmful) cigarettes.<\/span><\/div>
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Titled “The Impact of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data,” the study aimed to examine the effects of e-cigarette taxes implemented in eight U.S. states. Researchers used data from 35,000 national retailers from 2011 to 2017, finding that for every 10% increase in e-cigarette prices, sales dropped by 26%. However, a similar 10% increase in e-cigarette prices led to an 11% increase in traditional cigarette sales.<\/span><\/div>
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Michael Pesko, a co-author of the study and economist at Georgia State University, stated: “We estimate that for every e-cigarette pod not purchased due to the e-cigarette tax, an additional 6.2 packs of cigarettes will be purchased.”<\/span><\/div>
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