EU member countries have reportedly agreed to change the tax status of e-cigarettes so they are taxed the same as tobacco products.
This will allow member states to levy more tax on the products. According to a report in The Times, ambassadors for all the EU member states have asked the European Commission to create plans to class vaping as a tobacco product by as early as next year.
How prices could be affected
At present e-cigarettes are not included in the tax regime for tobacco products. Instead they just carry a VAT levy of 20%.
If they are moved into the tobacco camp then the price of vaping could double. Tax must make up at least 57% of the retail price of cigarettes with VAT charged on top of that.
It means an e-cigarette that currently costs £23 could leap in price to more than £53.
|Product||Current price||Predicted price if taxed as cigarettes|
Outbreak of a lobbying war
The move is being taken to counteract falling tax revenues as smokers switch to e-cigarettes. Last year the European Commission stated that it had recommended plans to “include e-cigarettes in the scope of excise duty on tobacco products”.
It warned at the time that a failure to do so “might have significant long term budgetary implications for member states.”
It comes at a time when the pharmaceutical industry is lobbying hard for stricter rules on vaping as it is worried the competition is affecting sales of nicotine patches and gum.
We could be set to see all-out lobbying war over how e-cigarettes are taxed with the pharmaceutical industry coming up against the tobacco industry. The latter wants legislation limiting e-cigarette sales minimised as e-cigarette sales help mitigate falling sales of traditional tobacco products.
However, it isn’t just the tobacco industry that isn’t keen on a big tax rise on vaping. Health experts are concerned too.
“If the EU were to require member states to tax electronic cigarettes like tobacco products it would be seriously detrimental to public health,” says Deborah Arnott from the health campaign group ASH. “It would lead to increased prices and discourage smokers from switching.”
Currently around 2.2 million Brits use e-cigarettes rather than traditional tobacco products.