The budget deal awaiting a final vote in Indiana today includes the state’s first-ever tax on e-cigarettes. Both the House and Senate had floated an extra 10 percent sales tax on e-liquids, but the final bill jacks that up to 15 percent. Prepackaged closed-pod cartridges like Juul will be taxed at 25 percent at the wholesale level.
Credit: Ken Shelton
Health advocates say the plan meets their goal of a tax rate comparable to the rate on traditional cigarettes, according to WIBC.com. Indiana State Medical Association president Roberto Darroca says doctors are particularly concerned about discouraging teenagers from taking up vaping so they don’t get a taste for nicotine and move on to traditional cigarettes.
The Senate had flirted with the idea of taxing closed-pod cartridges based on the amount of liquid they contained. Darroca says that would have been a mistake, and says negotiators did the right thing in basing the taxes on price. Because pod cartridges contain a fraction of the liquid sold for open systems, Darroca says a volume tax would have blown up the goal of making the vaping tax comparable to taxes on traditional tobacco products.
The Indiana Chamber had gone farther, blasting the volume-based tax as worse than doing nothing. President Kevin Brinegar says the Chamber supports the final version as a “big step” for public health, though he and Darroca both say they’re disappointed the Senate blocked a proposed cigarette tax hike.
The Canadian federal government tabled its annual budget yesterday and the legislation includes lawmaker’s intention to introduce a new excise tax framework in 2022. The Vaping Industry Trade Association (VITA) says the excise tax, when combined with a 70 percent reduction in maximum nicotine content and anticipated flavor restrictions, will create a once in a lifetime opportunity for the illicit market to grow and increase access points for youth.
“Taxation of vaping products in a way that is proportionate to the harm reduction value of vaping is not something that the industry is fundamentally opposed to. Indeed, if revenues are used to increase enforcement actions against anyone selling vaping products to minors, there could be significant support from our sector”, said Allan Rewak, VITA’s executive director. “What we are concerned about is that this tax, when combined with broad flavor bans and restrictive nicotine caps will make the legal and highly regulated vape market uncompetitive with a growing illegal one.”
According to a press release, VITA claims that vaping products are for adult smokers seeking to reduce their risk, “not nonsmokers and never youth.” Evidence has shown consistently that effective vaping products are one of the best means to transition heavy smokers away from cigarettes.
“The Illicit market doesn’t care about reducing risk for adult smokers, they don’t care about age gating or checking ID, and they don’t care about the quality and safety of the products they sell”, said Daniel David, VITA’s president. “I’m really concerned that this tax, when combined with flavor bans and unrealistic nicotine caps will create an opportunity for criminals to prey on our children while making it harder for those of us trying to help adult smokers reduce their risk to stay in business.”
The release also states that VITA believes that the government should utilize all revenue generated from this new taxation regime to empower increased enforcement action against anyone selling vape products to minors, while also reconsidering actions that would reduce the effectiveness of vaping products for adult smokers.
Estonia’s parliament recently voted to suspend the nation’s excise tax on e-liquid between April 1, 2021, and Dec. 31, 2022, to reduce cross-border and illicit trade. The Estonian excise duty on e-liquid has been €0.2 ($0.24) per milliliter since 2018. The Baltic state first considered making the move in 2020.
“Suspending the collection of excise duty will make it possible to lower the price of e-liquids and thus offer consumers controlled and safe products at a lower price,” said Tarmo Kruusimae, parliament member and chairman of the parliament’s Smoke Free Estonia Support Group.
“It has the potential to become a success story if we manage to reduce both the illicit trade and cross-border trade and at the same time offer less harmful alternatives to cigarettes at a more competitive price.”
The group estimates that about 62–80 percent of the Estonian e-liquid market comprises self-mixed, cross-border and smuggled e-liquids primarily from Latvia and Russia. The e-liquid black market strengthened in 2019 when Estonia implemented a tobacco and vapor product flavor ban.
Tobacco harm reduction advocates welcomed Estonia’s decision. “Estonia’s example with over-taxation of e-liquids should definitely be an educational experience for other countries,” said Ingmar Kurg, CEO of NNA Smoke Free Estonia and a member of the International Network of Nicotine Consumer Organizations, in a statement.
“If laboratory-tested and legal products are made too expensive for consumers, they will look for solutions in the black market, self-mixing and cross-border trade. Some people give up e-cigarettes and return to smoking, which happened in Estonia.”
Legislators in the U.S. state of Alaska are trying again this year to tax “electronic smoking products” the same as tobacco products. Bills to extend the state’s tobacco tax to electronic smoking products died last March as lawmakers rushed to close down the session amid the start of the pandemic. However, two lawmakers are trying again this year.
Credit: David Mark
The bills, sponsored by Kodiak Sen. Gary Stevens and Juneau Rep. Sara Hannan, have each cleared their first committee and are both waiting for a hearing in their respective Finance Committee before either could move to the full body for a vote.
Alaska has no statewide tax on vapor products, although the state taxes smokeless tobacco at 75 percent of wholesale. Cigarettes are taxed at $2 a pack. HB 110 would enact a 75 percent wholesale tax on e-liquids, vaping devices, and components (HB 110 is the House version of SB 45).
Tennessee has announced the starting date for its PACT Act requirements. The state’s Department of Revenue states that beginning May 10, 2021, and the 10th of every month thereafter, any entity shipping electronic nicotine-delivery systems (ENDS) or related products into Tennessee from another state is required to report all such shipments to the department.
It is expected that all states will require PACT Act reporting to begin on May 10. Effective March 28th, 2021, recipients of all vaping products purchased online will be required to present ID and sign for their delivery. The United States Postal Service mail ban on vaping products will go into effect on April 27th, 2021. After this date, customers will no longer be able to receive vaping products by way of USPS delivery.
The amended PACT Act provides that any person who sells, transfers, or ships for profit ENDS in interstate commerce, or who advertises such products for sale, must register with the tobacco tax administrator of the state into which the shipment is made. The company must also file monthly reports with the tobacco tax administrator no later than the 10th day of each month.
Under the PACT Act, a delivery seller faces violations that may result in civil penalties of up to $5,000 for the first violation, $10,000 for the second violation, or 2percent of the gross sales during the prior 12 months. Additionally, there are penalties for common carriers or other persons providing delivery services of up to $2,500 for a first violation or $5,000 for any other violation within one year of a prior violation.
The Malaysian Vape Chamber of Commerce (MVCC) said that the Malaysian vaping industry is valued at RM2.27 billion ($558 million). The figure is one of the primary findings of the recently released “Study on the Malaysian Vaping Industry” report, commissioned by the MVCC.
MVCC president Syed Azaudin Syed Ahma (center) Credit: MVCC
The MVCC has stated previously that the vape industry in Malaysia is too substantial to remain unregulated and has urged the government to immediately introduce appropriate regulations to create a positive multiplier effect to the Malaysian economy.
MVCC commissioned Green Zebras, a market research agency, to conduct the study, the first of its kind in the country, according to a MVCC release. The report found that there are more than 3,300 businesses related directly to the vapor industry, with a workforce of more than 15,000 workers. It was further estimated that workers in vape industry were paid up to RM450 million in wages in total in 2019.
“Our data strongly indicate that this sector is a viable and growing industry in Malaysia and can contribute significantly to the local economy. It has already facilitated the growth of local entrepreneurs, many of which are local and bumiputera businesses,” MVCC president Syed Azaudin Syed Ahmad said. “In addition, the Malaysian vape industry currently has an established ecosystem comprising manufacturers, importers and retailers, and a growing distribution and logistics network.
Credit: MVCC
In Malaysia, the government has already announced an excise tax on vape devices and e-liquids which has been implemented since 1st January 2021, according to thesundaily.com. However, MVCC believes that the tax regime needs to be broadened to include e-liquids with nicotine which make up 97 percent of the Malaysian market, in order to effectively contribute to the government’s revenue.
“The Malaysian vaping industry has significant potential that can be unlocked with practical and comprehensive regulation that must include the use of e-liquids with nicotine. This will spur the growth of SMEs, which will in turn create jobs and generate tax revenue for the Government,” added Syed Azaudin.
Malaysia is in good position to attract FDI into vaping sector as other sectors are seeing challenges to attract investments, according to Syed Azaudin. “MVCC believes the vaping sector is ready and capable to attract quality FDIs given its established ecosystem that global investors and multinational companies would find appealing,” he said.
The global e-cigarette and vape market size is expected to reach $67.31 billion (RM272.54 billion) by 2027, registering a revenue-based CAGR of 23.8 percent from 2020 to 2027, according to a new study conducted by Grand View Research.
“MVCC has spearheaded this study in order to provide the Government with a solid data driven foundation to immediately introduce regulations on the vape industry,” Syed Azaudin said.
To download the full report, visit the MVCC’s website.
Electronic cigarettes cannot be sold in the United Arab Emirates (UAE) unless they bear the digital tax stamp (DTS) beginning January 1, according to the Federal Tax Authority (FTA).
Credit: Jan Vasek
Electronic nicotine delivery systems (ENDS) products cannot be sold, transported, stored or possessed without the tax stamp. The DTS system helps the FTA “improve its ability to collect excise tax charged” on such products on being imported or manufactured locally. It also enables “stakeholders to analyse the supply chain to better control illicit tobacco products,” according to a story in the Khaleej Times.
In addition, the DTS system allows for the implementation of compliance standards. The FTA explained that the DTS system “facilitates inspection and control at customs outlets and local markets”.
The digital stamps will be placed on the packages of vapor, shisha and other tobacco products and registered in the FTA database. The DTS contains data that can be read with a special device to make sure all taxes due have been paid.
“When orders are made for these stamps, they are sent to factories to be placed individually. This will ensure each package is tracked to the port of entry of each country, with the supplier submitting the permit form and the fees for the digital stamps … This will ensure all digital stamps are registered and tracked through a central database,” the FTA said.
Oregon Ballot Measure 108, a new tax on e-cigarette products and a tax increase on tobacco products is going to hurt local businesses because the products will affect what consumers can afford. It could also drive current vapers back to combustible cigarettes. E-cigarettes would be taxed at the rate of 65 percent of the wholesale sales price under the measure.
The new e-cigarette tax would not include products that have been approved by the U.S. Food and Drug Administration to help people quit smoking. It also does not include e-cigarettes sold for the purpose of vaporizing marijuana.
Oregon’s NewsChannel 21 stated Wednesday that it spoken with representatives of Smoke This, High Mountain Mist and Valley Vapors, three vape shops that say customers have expressed concern about the possible tax hikes.
Measure 108 would raise the state’s cigarette tax by $2 per pack and tax e-cigarettes for the first time in Oregon. Currently, Oregon’s cigarette tax is $1.33 cents per stamp for a pack of 20 cigarettes.
Supporters say such increases bring Oregon’s cigarette taxes in line with Washington and California. That means it would likely stop Washingtonians from driving across the state boundary to buy cheaper cigarettes.
Jamie Dunphy, Oregon government relations director with the American Cancer Society Cancer Action Network, says the measure is about public health.
“Evidence shows that e-cigarette use directly leads to tobacco use, and it directly leads to cancers, and it directly leads to a lot of health disparities that cause lifelong problems.” Several studies have shown all three claims to be false.
Jason Weber, CEO of Vape Crusader, is working with local businesses in the “No On 108” campaign. He said the new tax would cause some businesses to take a hit. “A 65 percent tax on every product in our vaping stores is detrimental to our businesses,” Weber said. “I would say somewhere around 90 or 95 percent of us would have to shut down.”
Weber explained that there are parameters in place to keep people safe and healthy. “All of our stores are 21 and older, so youth can’t come in our stores as is,” Weber said. “Again, these products have been proven 95 percent safer than smoking.
“And then for the argument (that) this leads to tobacco use — well if that was the case, we’d see tobacco use skyrocket right now,” he said. “We don’t — we see that the CDC says it’s a 34 percent drop in vaping in the last year.”
The American Cancer Society said the tax dollars will go toward intervention, public services, rehabilitation and tobacco education programs. The bill states that 90 percent of tax revenues would go to the Oregon Health Authority to pay for the treatment of sick people, especially those suffering from mental illnesses. The remaining 10 percent would go to tribal health providers and other culturally specific health programs for tobacco cessation efforts.
Encourage smokers to switch to vapor products by taxing them lower than traditional cigarettes.
By George Gay
Recently, I was intrigued by the following heading that appeared above the abstract of a scientific paper: “Flavors enhance nicotine vapor self-administration in male mice.” I guess that, as a nonscientist used to reading general stories, I was drawn to the fact that there seems to be no human agency in the activities described. The flavors seem to operate of their own accord and the male mice “self-administer” those flavors.
Notice, too, how the flavors not only increase the uptake of nicotine vapor in male mice, they also “enhance” that uptake, presumably introducing some sort of measurable qualitative increase to the process. And what about this self-administering business? It seems to suggest that the male mice in question have personalities or egos, which I would be happy to accept but which raises the question of whether it was morally acceptable that these mice should have been used as a means to an end. I would say no.
Of course, if the mice did display signs of selfhood, I hope the researchers took care in interpreting their reactions. There is a danger of significant error in drawing human-centric conclusions about the behaviors of nonhuman animals being made to take part in human-designed experiments since those behaviors might be driven by the ways in which nonhuman animals uniquely experience their lives and that we do not understand.
Such experiments on nonhuman animals seem to me to be simply preposterous. Professor Sir George Pickering was apparently once quoted in the British Medical Journal as saying, “The idea, as I understand it, is that fundamental truths are revealed in laboratory experiments on lower animals and are then applied to the problem of a sick patient … It is plain nonsense.”
In the abstract, the researchers sidestep this problem by dropping any mention of the male mice from their “Conclusions and Implications.” The final sentence of the implications states, “This suggests that flavors in electronic nicotine-delivery systems significantly increase the risk of addiction-related behaviors among users of vaping products.” Obviously, the researchers have moved from male mice to humans because mice cannot be seen to be “users of vaping products.” And this move cannot, to my mind, be justified.
I have two other gripes with this research as it was described in the abstract. One is that it cannot be morally acceptable to conduct experiments on nonhuman animals so that human animals can pretend to learn a little more about the silly—pleasurable, but nevertheless silly—habit they have invented called vaping. If they want to learn about the effects of vaping on themselves, they should gird up their loins and carry out the experiments on themselves. And, of course, ditto all the other silly things that humans like to get up to.
The second gripe is that the research is pointless. Basically, it ends up suggesting that flavors are attractive—at least to some, I presume. I mean, doh! And despite this, the researchers have the cheek to mention as part of their conclusion “the need [my emphasis] to continue investigating the role electronic nicotine-delivery system (ENDS) flavors play in vaping-related behaviors.” I don’t think so. I think the researchers are confusing “desire” with “need,” which is a little worrying if the object of the exercise is to study addiction.
But let’s leave the scientific world behind because, while I was intrigued by the heading quoted at the start of the abstract, I was astonished by one introducing a recent general story: “Illicit cigarette smuggling could be key to fighting PPE fraud.”The heading seems to imply there is a form of cigarette smuggling that is not illicit, that is licit, an idea I firstly dismissed as daft. But the heading kept nagging at my brain and I started to wonder whether the headline writer had a point.
My confusion arose, I think, because I realized that whereas licit can mean lawful, it can have a softer meaning—something like “allowable.” So, if I were entering a country with 1,000 cigarettes on which I had no intention of paying duty even though the country in question required local duty to be paid on personal imports of cigarettes greater than 100, I would be smuggling or attempting to smuggle 900 cigarettes.
I would be committing an unlawful act and liable to the penalties imposed by that country for such breaches of the law. But, as I understand things, I would be in the clear if I were a diplomat from another country and those cigarettes were in my bags, and in this case, I think that it would be arguable that I was smuggling in a licit or allowable way.
And perhaps we could take this further. It might be stretching a point, but let’s extend the meaning of “licit” through “allowable” to “reasonable.” In fact, it’s not that much of a stretch; after all, the U.S. Food and Drug Administration uses the word “adulterated” as a synonym for illicit, and therefore, I presume, uses the word “unadulterated” as a synonym for licit, so, as I understand it, a cigarette is licit if it is unadulterated—if it contains nothing not declared in its list of ingredients—even though consumption of that cigarette will have you inhaling no end of toxins—unadulterated toxins presumably.
In any case, let’s say my status has fallen on hard times and I’m no longer a diplomat but a gig worker being paid starvation wages so as to keep the multibillionaire owner of the company I work for in the luxury to which she has become accustomed. And let’s say that despite my lowly financial status, the government—with the help of the World Health Organization and its track-and-trace system (property, not people)—requires that I pay the same taxes on a pack of cigarettes as does the owner of the company. Might it be reasonable or licit in these circumstances for me to say, “you can stick your tax-paid cigarettes where the sun doesn’t shine” and take advantage of the services of my local smuggler?
After all, it cannot be reasonable—dare I say licit—that each of us pays the same level of tax on our cigarettes, and here’s why. Cigarette taxes are there, we are told, to discourage people from smoking, but it would be absurd to suggest that the same level of taxes would discourage me, the gig worker picking up $10,000 a year, and the multibillionaire, picking up $100 million a year.
If the powers that be reckon that taxes of $5 per pack of cigarettes are going to deter me, they should make the multibillionaire pay $50,000 per pack in taxes. Anything less would not be fair on the multibillionaire because she would not be discouraged from smoking and her health would be endangered. And I care deeply about the well-being of multibillionaires.
To my mind, not only is the heading odd, but the story is too. At one point, we are told that the same networks developed to smuggle cigarettes and tobacco are now being used to perpetuate medical and personal protective equipment (PPE) fraud. This seems to imply that existing cigarette smuggling networks reach into the places where PPE is used: hospitals and care homes, for instance, and, frankly, I find this implausible. Surely, the networks that would be used, at least those at the sharp end of the supply chain, would be those that reach naturally into those facilities—perhaps those providing counterfeit drugs.
Once again, we seem to have a story that attempts to blame smokers for the evils of the world. And to me, this makes no sense because it allows us to ignore, and therefore not address, the real causes of PPE fraud: the inappropriate and often cruel interactions of human animals with nonhuman animals that give rise to zoonotic diseases; globalization and the free flow of goods and people from centers of such interactions to the rest of the world, which ensures the “efficient” spread of these diseases; the overreliance on the market economy that in the case of the current coronavirus pandemic meant that not enough PPE was available or obtainable at quick notice; and the poor or nonexistent due diligence performed by governments left exposed, by their own policies, to such shortages.
Address these issues and you are on your way to preventing PPE fraud. Approach the problem by trying to eliminate tobacco smuggling and you are at best going to put a dent in such trade, but you will leave yourself open to PPE fraud—and much else.
What has this got to do with you, a reader interested in issues about vaping? Well, the story seems to imply that not only are some smokers indirectly responsible for PPE fraud but that their actions could lead to a spike in the U.S. in the illegal trade in electronic and heat-not-burn cigarettes. I’m not sure, but I think the argument goes something like this: Tobacco regulation is causing more people to quit smoking, and some of these quitters are turning to vaping, which is the subject of a crackdown in the U.S. that will make licit vapor devices harder to obtain. Hence the predicted spike in the illegal trade in such devices.
Overall, the message seems to be that smokers should keep smoking but only tax-paid cigarettes because the illegal tobacco trade funds groups such as ISIS, the Irish Republican Army, Hezbollah and al-Qaeda. Once again, the smoker gets it in the neck for events that are so far out of her control that she might as well be blamed for sunspots.
There is not even an aside to suggest that the actions of ISIS, the Irish Republican Army, Hezbollah and al-Qaeda might be down to politics, ideology and the desire by governments, companies and shareholders to promote the sale of arms. There is no question raised about how much of the tax paid on a pack of cigarettes goes toward governments promoting arms sales. And there’s not even a whisper that religions might be playing a part in the activities of these groups. It’s all down to smokers who buy illicit cigarettes.
Is it? Of course not. Smokers are the victims. Many smokers are paid starvation wages in the gig economy and, we are told, are addicted to tobacco, so they are forced into the arms of smugglers when they can no longer afford the unreasonable tax and increased pricing demands made of them by governments and manufacturers. It is deeply unfair, or illicit, for manufacturers making billion-dollar annual profits to introduce several cigarette price increases in a year and then blame impoverished, addicted smokers for turning to the illegal trade and thereby supporting ISIS, or whatever. They need to examine their own actions.
In a fair or licit world, the solution would be clear. We don’t have to drag ISIS and the Irish Republican Army into the fight. And we don’t have to send researchers out with a brief to prove that sunspot activity is particularly prevalent directly above where smokers congregate outside pubs. We just have to charge a fair, or licit, price for cigarettes.
Of course, if your moral compass is able to lead you around experiments on nonhuman animals but runs you into a brick wall when it comes to allowing others to enjoy a cigarette, there is another answer—apart from trying to reset your moral compass, that is.
Encourage smokers to switch to vaping and other low-risk nicotine consumption, and definitely don’t discourage them from making the switch. And don’t get into the same fix with vaping as you did with smoking by piling on high levels of tax and creating a highly monopolized industry that is able to increase prices without due regard for the consequences of such actions.
What are the chances that things will change? Poor, I would say. I go along with whoever said that the one thing we learn from history is that we learn nothing from history.
The Korean government said Wednesday that taxes on e-liquids will nearly double starting next year. The “health promotion tax” on nicotine solutions will be raised from the current WON525 (0.45 cents) to WON1,050 a milliliter, according to a story in the Korea Herald.
The changes to the national health promotion laws were approved by the Cabinet recently, according to the Ministry of Health and Welfare, which are set to come into effect Jan. 1, 2021.
Ministry officials said the revisions are intended to achieve a fairer taxation on varying types of tobacco products. Currently, the tax rate for e-cigarettes is only 43 percent of that for conventional cigarettes.
The ministry warns against the use of e-cigarettes or vaping products, citing global instances of lung injuries associated with their use. The first local case of a suspected illness linked to vaping was reported in October last year.
d increase access points for youth.
