European Commission Proposes EU-Wide Tax on E-Cigarettes
According to the Financial Times, citing a draft EU document, the European Commission wants to raise the minimum excise tax on cigarettes from €1.80 per pack of 20 to €3.60 ($3.77) and impose an EU-wide tax on e-cigarettes. If approved, the legislation wo
According to a draft EU document cited by the Financial Times, the European Commission (EC) aims to raise the minimum excise tax on cigarettes from €1.80 to €3.60 per pack of 20 and to impose a tax on e-cigarettes across the EU.
If passed, this legislation would double the cigarette excise tax in EU member states with lower cigarette taxes. In some Eastern European countries, a pack of cigarettes currently costs less than €3. In countries like Austria and Luxembourg, where prices are relatively low compared to income, cigarette excise taxes would also see a significant increase. The increase in cigarette taxes is expected to generate an additional €9.3 billion for EU member states.
The update to the EU Tobacco Tax Directive from 2011 will also align the taxation of electronic nicotine delivery systems with that of cigarettes. Stronger e-cigarette products will be taxed at a minimum of 40%, while lower strength e-cigarettes will face a 20% tax. Heated tobacco products will also be taxed at 55%, with a rate of €91 per 1,000 units sold.
Rob Branston, a senior lecturer in business economics and a member of the Tobacco Control Research Group at the University of Bath, told the Financial Times that the tax update "should have been done long ago" to raise prices in countries where cigarettes are "too cheap" and to keep pace with inflation.
However, Peter van der Mark, Secretary General of the European Smoking Tobacco Association, warned that a sudden increase in tax rates could promote illegal tobacco sales.
Dustin Dahlmann, president of the Independent European Vape Alliance, stated that taxing new tobacco products could lead to "less harmful alternatives" being heavily taxed in many countries.
The proposal must be agreed upon by all EU member states before it can be written into law. BAT emphasized that the EC proposal draft is the "beginning of a long legislative process."
