Category: Taxation

UK Urged to Drop Proposed Vaping Tax Hike

Delon Human (Photo: Taco Tuinstra)
A plan to hike the tax on vapes in the U.K. risks undermining the country’s efforts to reduce smoking rates and would increase smoking-related death and disease, according to tobacco harm reduction advocates.
The U.K. chancellor is reportedly considering the tax increase in the state budget this month. But harm reduction specialists say any rise could drive people who smoke back to far more dangerous cigarettes.
“Vapes are proven to be 95 percent less harmful than combustible cigarettes and are helping millions of people who smoke worldwide transition to a safer option,” says Delon Human, leader of Smoke Free Sweden.
“Both Sweden and New Zealand have dramatically reduced their smoking rates in large part due to the availability and accessibility of alternative nicotine products like vapes. As a result, both countries are now on the verge of being declared smoke free and are reaping the subsequent public health dividend.
“Any policy that limits access to these alternatives—whether through taxation or other barriers—threatens to reverse such progress.”
Sweden is poised to be the first country to become smoke free as a result of its progressive policy approach, which includes lowering taxes on reduced-risk products while increasing taxes on more harmful cigarettes.
Compared to the rest of the European Union, Sweden has 44 percent fewer smoking-related deaths, a 41 percent lower cancer rate and 38 percent fewer deaths attributable to any cancer, notes Smoke Free Sweden
“At Smoke Free Sweden, we advocate for sensible regulations that protect adult access to safer alternatives while discouraging underage uptake,” Human said. “This includes restrictions on youth-oriented packaging and clear communication about the risks of nicotine.
“However, excessive taxation of harm reduction products is a step in the wrong direction. Rather than penalising vapers, governments should focus on creating an environment where adults have easy access to safer alternatives and are supported in their efforts to quit smoking.
“We urge the U.K. government to reconsider this proposed tax increase and to look towards evidence-based policies that have been successful in Sweden and other progressive nations. The world now has the tools to create a healthier, smoke-free future. We must not sacrifice those tools, which are already helping millions of people quit smoking for good.”
October 22, 2024
Campaigners Slam Irish Vape Product Tax Hike

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Campaigners slammed the Irish government’s decision to increase the excise duty on a pack of 20 cigarettes by €1 ($1.11) starting Oct. 2.
The increase, which is double the usual increase of €0.50, will push the cost of a pack of 20 cigarettes in the most popular price category above €18, according to The Journal.
Simon Clark, director of the Freedom Organization for the Right to Enjoy Smoking Tobacco (Forest), described the decision as “brutal” and said law-abiding smokers were being “discriminated” against.
“Smoking is a legitimate habit,” said Clark. “This brutal hike in the cost of cigarettes will drive more smokers to the black market and fuel illicit trade.
“Law-abiding consumers, many of whom are on low incomes, will be unfairly discriminated against, and some may be forced further into poverty.
“It’s hard to imagine a more punitive or counterproductive measure because the only people who will benefit are criminal gangs and illicit traders.”
In addition to the cigarette tax hike, Ireland plans to introduce a tax on e-cigarettes from the middle of next year. The excise will place a fee on e-liquid at a rate of €0.50 for every milliliter.
The average disposable e-cigarette has 2 mL of e-liquid and costs €8. The introduction of the new tax will increase the cost to €9.23.
Minister for Finance Jack Chambers said it was not possible to introduce the fee this year due to operational and administrative challenges.
Lobby group Respect Vapers has accused politicians of attempting to “raise funds on vapes rather than helping people use vapes to quit smoking.”
The group pointed to a recent report by Healthy Ireland that said 25 percent of smokers who quit had used vapes and other studies that show the number of smokers in Ireland has reduced drastically in recent years.
October 1, 2024
PMI Lobbies Nevada Lawmakers for Lower IQOS Tax

Credit: Aidman
Representatives from Philip Morris International (PMI) have begun pitching the benefits of its IQOS heated tobacco device to Nevada state lawmakers. The cigarette maker hopes Silver State legislators will pass a bill next year to tax heated tobacco at a lower rate than traditional cigarettes.
PMI is preparing to launch IQOS in the United States. As part of those efforts, PMI has hired lobbyists in multiple states, including Nevada, according to media reports. The company has postponed the test launch of IQOS in the U.S. to the fourth quarter. The company declined to say why. The pilot was earlier scheduled to run in Austin, Texas, in the second quarter.
Anti-tobacco activists have been seeking to derail the U.S. introduction of IQOS, arguing among other things that PMI exaggerates the number of people who have quit smoking regulator cigarettes using IQOS.
PMI director of Scientific Engagement Brian Erkkila explained how IQOS works in a presentation on Tuesday to Nevada’s Joint Interim Standing Committee on Revenue. While no specific legislative asks were made Tuesday, Eddie Ableser of Tri-Strategies — the Nevada-based government affairs firm working with PMI — told lawmakers the company is looking to start a conversation about how the product should be taxed.
“The intent is not a complete absolution of harm,” he told the lawmakers. “It’s harm reduction. How do we move and target the current cigarette smokers in Nevada? How can we move them onto a harm reduction product that helps them?”
He added, “We develop tax policy generally to motivate consumers one way or the other.”
Nevada tax policy does not consider heated tobacco products such as IQOS as other tobacco products (OTPs), which includes vaping devices, and they are taxed at 30 percent of the wholesale price. However, most tax codes generally consider heated tobacco products to be traditional cigarettes.
In Nevada, cigarettes are taxed the equivalent of $1.80 per pack. According to the anti-nicotine nonprofit Truth Initiative, Nevada is in the middle of the pack (25th highest) when it comes to tax rates for cigarettes.
According to the Organized Crime and Corruption Reporting Project, PMI has successfully lobbied at least 10 countries to tax heated tobacco products at a lower rate than traditional cigarettes, using the argument that the product is far less harmful and less worthy of any kind of “sin tax.”
PMI launched IQOS in Japan a decade ago and has since expanded into dozens of other countries. According to Alexandra Wich, a senior manager of state regulatory and public policy at PMI, intellectual property litigation has kept the product out of the U.S. market, but those issues have been resolved.
The U.S. Food and Drug Administration gave PMI permission to market their products as reducing exposure to the harmful chemicals produced by combustible cigarettes, concluding that “the net population-level benefits to adult smokers outweigh the risks to youth.”
September 1, 2024
Nebraska Lawmaker Introduces Vaping Tax Bill
Credit: Mandritoiu
Lawmakers in Nebraska have introduced legislation to increase the tax on vaping products.
The tax on electronic nicotine delivery system (ENDS) products will be 40 percent of the purchase price of the device if the bill becomes law.
The tax is to be paid by the first owner or at a price at which the first owner who made, manufactured, or fabricated the ENDS product sells the item to others, the proposed bill states.
For ENDS products in the possession of retail dealers for which tax has not been paid, the bill states that the tax shall be imposed at the earliest time the retail dealer “brings or causes to be brought into the state” any ENDS device for sale.
The bill is currently with the Revenue Committee in Nebraska’s House of Representatives.
July 30, 2024
Romania Restricts Advertising of Vaping Products

Photo: cristianbalate
Romania has tightened advertising restriction on electronic nicotine devices and modern oral products, reports Xinhua.
Under new legislation signed into law by President Klaus Iohannis on July 19, the rules cover e-cigarettes, heat-not-burn (HNB) products and nicotine pouches.
Explicit advertising for these products is now banned on radio and television broadcasts and on public transportation tickets.
Furthermore, the legislation prohibits advertising for these products within educational and healthcare institutions or within 200 meters of their entrances.
The law also restricts advertising in publications primarily targeting minors and in theaters before, during, and after performances intended for children.
July 20, 2024
Malaysia Health Policy Group Decries Vape Tax Usage

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A public health advocate was shocked by the Malaysian government’s decision to retain the tax revenue from vape products collected over the last four years in the Federal Consolidated Fund despite a previous pledge to utilize it for health-related initiatives.
“Government and non-governmental organizations working in public health are going to need all the additional resources that they can get to deal with the consequences of unrestricted and unprohibited marketing and sales of disposable nicotine vape devices, including through vending machines,” a release from the Galen Centre for Health and Social Policy states.
The group has opposed the move to de-classify nicotine in vape products as a poison so that the government could tax its sale. According to media reports, Galen Centre CEO Azrul Mohd Khalib said, “The vape tax revenue would have been used for this purpose.”
Prime Minister Anwar Ibrahim, who is also the finance minister, recently said the government collected RM141.1 million ($30 million) in vape tax revenue, including RM58.55 million from nicotine-containing vape liquid products, from 2021 to 2024.
He had previously stated that half of the vape tax revenue would be earmarked for the health ministry, which was seen as appeasing criticism that the government was trying to stop stricter anti-tobacco laws in the face of protests from the powerful tobacco lobby.
“The government supports the spirit of the generational end game (GEG) and has agreed to earmark half of the revenue from this excise duty for the Ministry of Health for efforts to improve the quality of health services and for effective anti-smoking and anti-drinking campaigns,” Anwar had said during his budget speech on Feb 24 last year.
Galen Centre said the government made the promise to justify its argument that nicotine vaping should not be banned.
“Half of RM141.1 million is RM70 million more funds, which could help repair the damage of having nicotine vape completely deregulated for more than a year,” said Azrul. “This money is intended to complement existing allocations given to the Ministry of Health, especially in the area of health education and promotion, which is severely underfunded.”
July 11, 2024
UKVIA Warns Against Consequences of Vape Taxes

Photo: VPZ
The U.K. Vaping Industry Association (UKVIA) has warned that the Conservative Party’s proposal to tax vapes based on nicotine strength, predicted to increase the cost of some products upward of 300 percent, threatens to undo the work that the category has already done in saving millions of smokers’ lives.
In its submission to the government’s vaping duty consultation, the association argues that by making higher strength vaping more expensive, the proposed tax regime will place an unfair financial burden on nicotine-dependent smokers who are trying to quit. The UKVIA points to the fact that smokers are already significantly overestimating the risks of vaping compared to smoking and that a measure that discourages the use of sufficient nicotine to facilitate a quit attempt is likely to have the effect of decreasing the rate of successful quit attempts.
The association also argues in its submission that as smokers are disproportionally from lower socioeconomic backgrounds, the effect of introducing an excise duty for nicotine-containing vapes, the most appealing form of e-cigarette for smokers, will be dramatic and potentially fatal.
This conclusion is supported by HM Revenue and Customs (HMRC) Research Report Number 740, Understanding the Vaping Market, which found that less affluent adults were “more likely than average” to report being current vapers and revealed that 32 percent of current vapers are motivated to use these products over cigarettes due to cost savings. The same HMRC report also highlighted that the doubling of the prices of vaping could result in 62 percent of current users reducing how much they vape.
The UKVIA is calling for the proposed taxation of vapes to be based on e-liquid quantity and not based on nicotine strength. It believes a specific sales tax on all vaping products and nicotine levels at the rate of £1 ($1.25) per 10 mL would be far more effective in achieving the duty’s stated objectives.
Smokers who smoke more or are more nicotine reliant need higher concentrations of nicotine, at least initially, according to the UKVIA. The association feels they should not be deterred from quitting by having to pay an extra premium to buy the higher concentration nicotine e-liquids that they need.

While a tax on vapes may be inevitable, it does need to be effective and not counterproductive.
John Dunne, director general, UKVIA
“While a tax on vapes may be inevitable, it does need to be effective and not counterproductive,” said UKVIA Director General John Dunne in a statement. “In recent years, millions of smokers have managed to quit through using vaping products, and discouraging others from making the switch would have disastrous, and in many cases fatal, consequences.
“The industry therefore urges the government not to unfairly discriminate against nicotine-containing vapes, which are the most popular devices for a reason. It would be far more valuable for the government to instigate a vape licensing scheme, for which we have long been calling; such a scheme would deter rogue retailers, protect our children and help a heavily under-funded Trading Standards to police retailers by raising £50 million a year from the industry.”
May 30, 2024
Nebraska Bill Would Create Vape Registry, More Tax

Credit: Mandritoiu
Nebraska is seeking to join the growing number of states that have created a registry of authorized vaping products retailers can sell.
State Sen. Jana Hughes sponsored a successful bill last year that implemented a 5-cent-per-militer excise tax on disposable vape liquids and a 10 percent wholesale tax on other electronic nicotine-delivery system (ENDS) products that began Jan. 1.
She has returned this year with Legislative Bill 1296, to regulate vaping products through a vape registry and increase the tax on wholesale products to 20 percent.
Earlier this month, lawmakers advanced LB 1296 by attaching it to LB 1204 — a General Affairs Committee priority bill — and advanced the package again Friday. It is awaiting one final round of debate.
Hughes told media that in the United States, there’s a perception that products sold in retail outlets are safe. However, she said, the federal government, which is supposed to be responsible for product regulation and safety, has dropped the ball.
“If they get their stuff together … then we’re done,” Hughes said of her bill. “But they’re not doing it.”
Hughes said she had amended her legislation in part with the help of “reputable” vape shops and would have manufacturers list their chemicals, allowing easier regulation and seizure if needed. The senator said this could also prevent imports of products from outside the country, where 99.9 percent of all vaping products are produced.
Her proposal is not meant to be a moneymaker or a money sucker, she said, but to create an even “wash” between fees assessed on the vape industry and oversight costs.
“But that’s the hard part: This is brand-new territory,” Hughes said.
Under her bill, an application for certification would cost $75 for each type or model of electronic nicotine delivery system sold in Nebraska instead of $250 per system. Hughes noted that lawmakers may need to extend the debate one more time if the fiscal estimate isn’t a “wash.”
Hughes’ bill would also require in-person pickup of vape products and end mail delivery for purchases made online or over the phone.
The bill also has provisions meant to crack down on advertising targeted at minors, outlawing ads or packaging that depict a cartoon-like fictional character that mimics a character primarily aimed at entertaining minors, imitating or mimicking trademarks or trade dress of products that are or have been primarily marketed to minors, or including an image of a celebrity.
March 18, 2024
Critics Claim New U.K. Levy on Vapes is ‘Stupid’

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The imposition of a vape levy in the U.K. is “stupid, short-sighted and potentially counterproductive,” according to smokers’ rights group Forest.
During his budget speech in Parliament on March 6, Finance Minister Jeremy Hunt said he is planning to introduce an extra tax on e-cigarettes from October 2026, aiming to make vaping more expensive and deter nonsmokers from taking it up.
Currently, most vapes in Britain are subject to value-added tax at the standard 20 percent rate, but there is no extra levy applied. Hunt said the government would also introduce a one-off increase in tobacco duty to maintain the financial incentive to choose vaping over smoking.
Nonetheless, critics warned that the new vape tax would discourage smokers from transitioning to less harmful nicotine products.
“If the government is serious about advocating vaping as a substantially less harmful alternative to smoking, a levy on vaping products sends completely the wrong message to consumers,” said Simon Clark, director of Forest.
“Vaping products are already subject to VAT. Imposing excise duty as well is a stupid, short-sighted and potentially counterproductive measure that could deter many existing smokers from switching to a reduced-risk product that has helped millions of smokers to quit.”
Maggie Rae, president of the Epidemiology and Public Health Section of the Royal Society of Medicine, said any tax must be carefully considered to ensure it benefits public health.
“It’s imperative we ensure medicinal use of vapes continues to be encouraged, as smoking cessation remains the matter of greater importance,” she said.
Clark noted that above-inflation increases in the cost of tobacco disproportionately punish those on lower incomes.
“Further tax hikes will drive even more smokers to the black market, taking money from legitimate retailers and putting it into the hands of criminal gangs,” he said.
Jefferies analyst Owen Bennett said the tax could benefit larger players like BAT by making it harder for smaller players to compete.
“BAT, especially given its highly profitable broader cigarette business, can afford to swallow the tax and not adjust prices,” he told Reuters, whereas it could make smaller firms’ products unviable.
March 6, 2024
U.K. Poised to Announce Strict Vaping Levies

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U.K. Chancellor Jeremy Hunt is expected to announce a “vaping products levy” during the presentation of the government budget on March 6, reports The Guardian.
The tax would be similar to 15 schemes in European countries, including Germany, where a €1.60 ($1.73) tax is charged on every 10 mL of vape liquid, and Italy where the rate is €1.30. The EU is also planning a vaping levy across the 27-nation bloc.
The U.K. tax would charge higher rates for products with more nicotine. There would also be a one-off increase in tobacco duty to ensure that vaping remains a cheaper alternative, with the two measures expected to raise more than £500 million ($633.73 million) a year by 2028–2029, according to The Times.
Prime Minister Rishi Sunak plans to ban smoking for the next generation by steadily increasing the legal smoking age in England so that tobacco would end up never being sold to anyone born on or after Jan. 1, 2009.
Vaping industry representatives described the tax plan as an attack on people trying to quit smoking.
“Vaping is proven to be the most effective way for smokers to quit and in doing so helps drastically reduce the cost of care the NHS [National Health Service] provides to smokers,” said John Dunne, director general of the U.K. Vaping Industry Association, in a statement.
“It makes absolutely no sense to make it more difficult for adults to stop smoking by penalizing those who choose a safer and healthier option in vaping. Smoking kills 250 people every day in the U.K. and according to Action on Smoking and Health costs the U.K. £17 billion a year,” Dunne added.
“A Centre for Economics and Business Research report in 2022 found that smokers switching to vaping saved the NHS £322 million, a figure that was estimated to more than double if 50 percent of U.K. smokers made the switch to vapes.
“Surely, we should be doing everything we can to help smokers escape a habit that kills so many. Increasing taxes on vaping will make vapes less accessible for the most disadvantaged in society who have the highest smoking rates and are most in need of an effective tool to quit.
“The government continue to hide their heads in the sand while taking actions that will fuel a black market which is already in danger of being out of control. Restricting access to vapes will not only mean more smokers; it will also mean more illegal and unregulated vapes. We need the government to license vape retailers and properly enforce the law against youth access before it is too late.”

It makes absolutely no sense to make it more difficult for adults to stop smoking by penalizing those who choose a safer and healthier option in vaping.
John Dunne, director general, UKVIA
“A Centre for Economics and Business Research report in 2022 found that smokers switching to vaping saved the NHS £322 million, a figure that was estimated to more than double if 50 percent of U.K. smokers made the switch to vapes.”
“Surely, we should be doing everything we can to help smokers escape a habit that kills so many. Increasing taxes on vaping will make vapes less accessible for the most disadvantaged in society who have the highest smoking rates and are most in need of an effective tool to quit.
“The government continue to hide their heads in the sand, while taking actions that will fuel a black market which is already in danger of being out of control. Restricting access to vapes will not only mean more smokers; it will also mean more illegal and unregulated vapes. We need the government to license vape retailers and properly enforce the law against youth access before it is too late.”
February 27, 2024