The EU is to propose a bloc-wide vaping levy as part of a shake-up of taxation on the tobacco industry that would also double excise duties in member states with low cigarette taxes, according to a draft European Commission document, reports Financial Times.
The legislative changes, part of a push by Brussels to reduce smoking rates, will increase the EU’s minimum excise duty on cigarettes from EUR 1.80 to 3.60 per pack of 20, which would raise prices in Eastern European nations where packs can sell for less than EUR 3.
The 2011 update to the EU tobacco taxation directive will also bring the taxation of novel smoking products, such as vapes and heated tobacco in line with cigarettes. Stronger vaping products would be subject to an excise duty of at least 40 per cent, while lower-strength vapes will face a 20 per cent duty. Heated tobacco products will also be hit by 55 per cent duty, or a tax rate of EUR 91 per 1,000 items sold, the report said.
The tax rise on cigarettes is expected to generate an extra EUR 9.3 billion for EU member states.
The changes aim to speed up the EU’s efforts for a “tobacco-free generation” by 2040. As part of the EU’s Beating Cancer Plan, health officials aim to reduce tobacco use among EU citizens from the current level of about 25 per cent to 20 per cent in 2025 and below 5 per cent in 2040.
Rob Branston, senior lecturer in business economics and a member of the University of Bath’s Tobacco Control Research Group, said the tax regime update was “long overdue” to increase prices in countries where cigarettes were “too cheap” and to catch up with inflation. Peter van der Mark, secretary-general of the European Smoking Tobacco Association, warned that “if you have a sudden very steep increase, you can create a market for illicit trade”. Dustin Dahlmann, president of the Independent European Vape Alliance, added that imposing taxes on novel tobacco products could lead to “the much less harmful alternatives” to smoking being “taxed far too heavily in many countries”.
The proposal will have to be agreed by all EU member states before it becomes law. According to the report, British American Tobacco stressed this was “the beginning of a long legislative process”. The commission did not respond to a request for comment.