Category: Taxation

Vaping Tax Dropped From U.S Bill

Photo: cn0ra
A proposal to impose U.S. federal taxes on vaping has been removed from the Democrats’ healthcare, education and climate change bill, reports The Wall Street Journal, citing people familiar with the matter.
Nevada Senator Catherine Cortez Masto, a Finance Committee member in a tough re-election race, reportedly pushed to remove the tax and helped force its deletion.
The removed provision would have levied a tax on vaping products designed to parallel the existing federal cigarette tax rate of $1.01 per pack.
The tax had draw considerable criticism from vapor industry representatives and tobacco harm reduction advocates, who said it would in some cases make e-cigarettes more expensive than combustible cigarettes—a perverse outcome, given that vaping is widely believed to be less harmful than smoking.
Critics also noted the tax would be regressive. According to a recent Gallup poll, Americans with an annual household income of less than $40,000 are significantly more likely to vape than higher-income groups.
Vaping advocates welcomed the decision. “The evidence is clear that imposing a new excise tax on vaping products will discourage adults from quitting smoking and shut down small businesses already dealing with industry-crushing federal regulations,” Gregory Conley, president of the American Vaping Association, was quoted as saying by The Wall Street Journal.
December 10, 2021
University Urges Big Tobacco Tax Hike

Photo: Schlierner
The Dutch government will need to increase tobacco taxes substantially if it wants to meet its tobacco control objectives, reports DutchNews, citing a study by Maastricht University.

They found that cigarettes would need to cost at least €12 ($13.50) per pack to entice 10 percent of smokers to quit, and some 50 percent of smokers say they would only quit at a price of €60 per pack. Cigarettes in the Netherlands currently cost around €8.20 per pack, and this is scheduled to rise to €10 by 2023.

The researchers say this illustrates not only how addictive but also how affordable cigarettes are. “People adjust their consumption when they notice the difference in their wallet, when something becomes more or less affordable,” said UM researcher Cloe Geboers. “So big hikes in excise duty, like the €1 increase in 2020, are highly desirable when it comes to discouraging smoking.”

The government aims to reduce the number of smokers to 5 percent by 2040. Some 22 percent of the Dutch population still smoke, and 35,000 people in the Netherlands die each year from the effects of smoking, being overweight or problem drinking.
November 24, 2021
Nicotine Tax Inches Closer as U.S. House Passes Legislation

Critics call the proposal ‘a public health disaster.’
The U.S. House of Representatives has passed the portion of the Build Back Better Act that includes a controversial nicotine tax. The legislation will now head for the Senate, where it faces an uphill battle.
In a 220 to 213 vote, the House voted mostly along party lines for the legislation that has often been compared to the New Deal. Biden signed the second piece of his domestic agenda, a $1.2 trillion package focused on infrastructure improvements, into law earlier this week.
To help fund the plans, the legislation calls for a tax of $50.33 per 1,810 mg of nicotine for “any nicotine product that has been extracted, concentrated or synthesized.”
Critics warned that raising taxes on smoking alternatives while leaving taxes the same on traditional cigarettes risks driving vapers back to smoking.
“The science is crystal clear: This bill is a public health disaster,” said Tim Andrews, director of consumer issues at Americans for Tax Reform. “The tax hikes on people trying to quit smoking contained in H.R. 5376 would lead to more people, millions more Americans smoking—and dying as a result.”
Andrews’ concerns were echoed by Michael Pesko, an associate professor in the Department of Economics at Georgia State University.
“Given extensive peer-reviewed evidence indicating that these products are substitutes, an unintended but inevitable effect of increasing taxes on e-cigarettes is to increase cigarette use,” he said. “A wide array of research suggests that this boost in cigarette use as a result of large e-cigarette tax increases would significantly increase overall tobacco-related death and disease.”
November 19, 2021
Trade Body Urges Changes to EU Directive

Photo: ITSA
The International Tax Stamp Association (ITSA) is calling for improvements to the EU Tobacco Products Directive (TPD), which is currently undergoing a mandatory review.
Among other things, the association believes the TPD should be more prescriptive on tobacco product security features, thereby avoiding countries adopting too many different features, which creates confusion.
The tobacco industry’s responsibilities should be limited to ordering, applying and reporting the use of tax stamps, with all other responsibilities reassigned to independent providers selected by government authorities.
ITSA also recommends that the importance of tax stamps be recognized in the legal language of the EU TPD. Therefore, any new version of the directive should encourage the adoption of legal instruments to introduce tax stamps by those member states that currently don’t use them, as well as introduce, as a transitional measure, a security label designed and procured by the issuing authority.
Juan Yanez
Another recommendation is for the language used to describe tax stamps to explicitly require them to have traceability functionality. This is an essential tool for the security of the system and complements the unique identifier directly printed or marked on the product pack. It also improves tracking of the issuance of the tax stamp, secures tighter controls and limits the impact of any fraudulent activity.
“Now, more than ever, the time is right for us all to come together as a united force over illicit trade and lost tax revenues,” said ITSA Chairman Juan Carlos Yanez Arenas.
“With the tobacco traceability requirements of the WHO FCTC Protocol entering into force in 2023, countries that are party to the Protocol have two years left to implement these systems, and we can help them with this by offering practical guidance based on proven best practice. We have identified the best features of the EU TPD, as well as those that can be improved on, which can be taken and used to deliver world class programs that everyone involved in the tobacco sector stands to benefit from.”
November 12, 2021
Free Tobacco Tax Seminar Starts at 2pm Eastern Time
IGEN is offering a free tobacco tax seminar today at 2pm Eastern time.
Tax on Top of Tax: Understanding Excise and Sales Tax for Tobacco Companies
Thursday, November 11, 2021 at 02:00 PM Eastern Standard Time.
Here is the registration link: https://event.on24.com/wcc/r/3503035/62668563942F38D446017F0BADE87F98
November 11, 2021
‘Vapor Tax Would Lead to More Smokers’

Photo: New Africa
Guy Bentley
The nicotine tax in the U.S. Build Back Better Plan bill will negatively affect public health and hurt lower- and middle-class Americans, according to Guy Bentley, director of consumer freedom research at the Reason Foundation.
The current version of ever-changing proposal would introduce a new tax on e-cigarettes and other smoking alternatives, which research suggests are dramatically safer options for smokers.
A 6 milligram nicotine/30 milliliter bottle of e-liquid, for example, would be taxed at a rate of $5.01 under the proposal. A typical pack of e-liquid pods would be taxed at $4.59. The federal tax on cigarettes is $1.01 per pack. Thus, e-cigarettes would be taxed more than regular cigarettes, and dramatically more so in states that already levy their own high e-cigarette taxes.
Writing on the Reason Foundation’s website, Bentley cites Michael Pesko of Georgia State University, who estimates the new tax on nicotine alternatives would cause 2.7 million more daily adult smokers, 530,000 more teen smokers and 29,000 more prenatal smokers. (Pesko recently shared some of his concerns in a letter to Congress).
This is because e-cigarettes are substitutes, not complements to combustible cigarettes, and millions of American ex-smokers have used these products to get off smoking traditional cigarettes.
Bentley says the tax is also highly regressive and would violate President Biden’s campaign promise not to raise taxes on people earning less than $400,000 a year. According to a recent Gallup poll, Americans with an annual household income of less than $40,000 are significantly more likely to vape than higher-income groups.
“With more than 15 million adult vapers now in America, many of whom attribute their ability to quit or reduce smoking traditional cigarettes to their use of e-cigarettes, it’s baffling House Democrats would consider targeting this group with a huge tax increase that could push many of them back to smoking and worsen public health,” wrote Bentley.
November 11, 2021
Ukraine Urged to Delay Tax Rate Convergence

Photo: Ivan Semenovych
Ukraine’s leading cigarette manufacturers have called on the government to postpone the date by which the country’s tobacco excise tax must match those in the EU from 2025 to 2030, citing out-of-control growth of illicit tobacco sales, reports Ukraine Open for Business.
According to the Kantar Ukraine research institute, the black market jumped from 1 percent of all tobacco sales in 2016 to 18.1 percent in August 2021 as the country is increasing its tobacco excise taxes to the EU level of €90 per 1,000 cigarettes by 2025.
The current rate is €48.4 per 1,000 cigarettes.
Ukraine’s total legal cigarette market is now estimated at 32.7 billion units, which is 18 percent less than in 2020 and more than 40 percent less than its volume in 2018.
“We propose to expand the schedule for increasing excise taxes on tobacco products until 2030, providing for an annual increase in rates at the level of 10 percent [instead of the current 20 percent]. This will stabilize the situation in the tobacco market,” said Rastislav Cernak, CEO of Imperial Tobacco Ukraine.
He also proposed to “freeze” the increase in the excise tax on heated-tobacco products for three years, until 2024. “This approach will give the consumer more time to adjust to higher prices and deprive the illegal market of the potential for growth,” said Cernak.
Philip Morris International hinted it would consider manufacturing tobacco-heating products in Ukraine if the state creates the appropriate conditions.
Local manufacture of such products could generate more than UAH6 billion ($229.5 million) in investments and UAH4 billion in additional income, according to some estimates.
November 10, 2021
Vapor Tax Resurfaces in Build Back Better Act

Photo: DedMityay
U.S. Lawmakers have reintroduced a tax on vapor products into the Biden administration’s Build Back Better Act, reports the Winston-Salem Journal. Earlier a series of controversial tobacco hikes had been removed from the legislation.
The latest version of the bill calls of $50.33 per 1,810 milligrams of nicotine for “any nicotine product that has been extracted, concentrated or synthesized.” The previously proposed vapor tax was $100.66 per 1,810 mg.
Vapor industry representatives were unimpressed. “American voters are already livid with paying high prices at the pump and the grocery store,” Amanda Wheeler, president of the American Vapor Manufacturers Association, was quoted as saying by the Winston-Salem Journal.
“It’s a certainty they will be outraged with a gigantic tax on a product that millions use to quit cigarettes.”
November 8, 2021
BAT Calls for Higher Cigarette Taxes in Japan

Photo: Colleen Williams
British American Tobacco has surprised some observers by calling for higher cigarette taxes in Japan, reports the Japan Times.
The company has submitted the request in writing to a group of lawmakers ahead of a tax system reform scheduled for 2022.
The unusual move by a tobacco-maker comes as Japan is slated to raise its tobacco tax only for heat-not-burn (HnB) tobacco products in October 2022, which is expected to make some of such products more expensive than cigarettes.
BAT is concerned that this will discourage smokers from switching to HnB products, which the company believes are less harmful to health than combustible cigarettes.
The company is also requesting that the tax on heat-not-burn tobacco be increased at a slower pace than that for cigarettes in the medium to long run.
In 2018, the government decided to increase the cigarette tax by ¥1 per cigarette each in 2018, 2020 and 2021 and the tax on heat-not-burn products in five stages from 2018 to 2022.
According to the Tobacco Institute of Japan (TIOJ), sales of cigarettes in fiscal 2020, which ended last March, dropped 11.8 percent from the previous year to ¥2.47 trillion, due in part to a fall in opportunities to smoke outside home as people stayed at home amid the coronavirus pandemic.
Tobacco harm reduction activists attribute the sharp drop in smoking to the rising popularity of HnB products.
The TIOJ’s first survey of HnB products showed sales of ¥1.06 trillion, or more than 40 percent of the country’s cigarette sales.
November 5, 2021
Malaysia Plans Excise for Vapor Products

Photo: chachanit
The government of Malaysia plans to introduce excise duties on all vapor products containing nicotine, reports Malay Mail.
Without revealing the height of the intended taxes, Finance Minister Tengku Zafrul Abdul Aziz said the move was to promote a healthier lifestyle among Malaysians.
British American Tobacco managing director Nedal Salem commended the plan, saying it was a right move towards tobacco harm reduction in Malaysia.
“Regulation will not only allow vape users access to reduced-risk alternatives to smoking, but also ensure the products used are compliant to quality and safety standards,” Salem wrote in a statement.
However, he warned the government that any new tax framework must be carefully crafted to ensure it does not drive consumers toward cheaper, less-regulated alternatives.
“If not, the mistakes of high tobacco excise rates will be repeated where currently the government loses MYR5 billion (1.2 billion) annually,” Salem wrote.
November 1, 2021