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  • France Wants EU to Raise Tobacco Taxes in Luxembourg

    France Wants EU to Raise Tobacco Taxes in Luxembourg

    Believing higher cigarette prices directly correlate to lesser use, France has continued to tax nicotine products in hopes of reducing smoking in the country. Though the number of cigarettes purchased in the country declined 26% between 2017 and 2022, the same can’t be said of the smoking rate which remains at 29.2%, a slight improvement from 33% in 2017. The problem is that consumers, predictably, will seek out better deals, and in this case need only to cross the border into Luxembourg.

    A pack of 25 cigarettes in Luxembourg costs €8, whereas the same pack across the way in France costs  €15. A recent study by the French Observatory of Drugs and Addictive Tendencies shows that the sales drop for cigarettes at the border is even more dramatic, at 46.2%. As such, French officials are petitioning the EU to level the playing field.

    “Public health policies aimed at reducing tobacco consumption see their effect limited, in particular, because of the development of the parallel market,” French MP Frédéric Valletoux said in a recent motion for a resolution calling for changes to anti-smoking regulations at the European level.

    “Aligning tobacco taxation across the 27 Member States would reduce price disparities and limit cross-border purchases,” according to a report on tobacco published in March 2024 by a European Parliament working group. The report acknowledged the challenges of achieving this goal, as taxation remains outside the EU’s jurisdiction, and price differences between member states continue to widen.

    Another solution being pushed by the French would be to impose tobacco delivery quotas within the EU, as outlined in the World Health Organization protocol to eliminate illicit trade in tobacco products. The quotas would limit tobacco deliveries to each country based on domestic consumption. For example, Luxembourg receives three billion cigarettes annually, despite its domestic consumption being only 600 million.

    Luxembourg is raising the prices on the cheapest cigarettes in its market by €0.30 but otherwise isn’t likely to take more aggressive actions as its Customs and Excise Administration says cigarette sales reached 4.9 billion units in 2024, generating €1.4 billion in revenue for the country. This figure is expected to rise to €1.6 billion in 2025 and €1.9 billion by 2028.

  • Vietnam Told Gradual Tax Hike Will Prevent Illicit Tobacco Surge 

    Vietnam Told Gradual Tax Hike Will Prevent Illicit Tobacco Surge 

    Vietnam is reviewing new tax policies for tobacco products, with experts recommending a gradual tax increase every two years instead of higher annual hikes. The Vietnam Tax Advisory Association (VTCA) has raised concerns that sharp, sudden tax hikes may backfire, leading to higher illicit cigarette trade and reduced tax revenue.

    According to the draft law, the government plans to impose a hybrid tax system on tobacco products, combining the current 75% ad valorem tax with a specific absolute tax increase on each pack of cigarettes. The VTCA submitted its recommendations for two proposed scenarios:

    The first scenario suggests an annual increase of VND 2,000 ($0.08) per pack starting in 2026, leading to a total tax hike of VND 10,000 ($0.40) per pack by 2030.

    The second scenario proposes a VND 5,000 ($0.20) increase in 2026, followed by an additional VND 1,000 ($0.04) increase per year from 2027 to 2029, also culminating in a total increase of VND 10,000 ($0.40) per pack by 2030.

    VTCA has urged policymakers to be cautious, citing examples from other countries where abrupt tax increases led to unintended consequences, mainly that smoking rates didn’t drop as consumers turned to cheaper illicit products.

    If this proposal is not accepted, VTCA has recommended that lawmakers adopt the first scenario, which calls for an annual increase of VND 2,000 ($0.08) per pack starting in 2026, reaching VND 10,000 ($0.40) by 2030.

  • Legislation Introduced to Close Tobacco “Loopholes”

    Legislation Introduced to Close Tobacco “Loopholes”

    U.S. Senate Democratic Whip Dick Durbin, U.S. Senator Ron Wyden, U.S. Representative Raja Krishnamoothi, and several others today (March 4) introduced the End Tobacco Loopholes Act, legislation that would “lower tobacco use and reduce healthcare spending” by increasing the taxes on tobacco products. The legislation would establish a federal tax on e-cigarettes, update the federal cigarette tax rate, and harmonize the tax rate across tobacco products.

    “Big Tobacco’s deadly profit scheme relies on addicting children,” Durbin said. “Our most effective strategy to reduce smoking and prevent a new generation from becoming addicted is to price these dangerous tobacco products out of the reach of children. But federal law has not been updated in 16 years, creating loopholes that Big Tobacco has used to hook kids. The End Tobacco Loopholes Act would help reduce tobacco and e-cigarette use, save billions in healthcare costs, and improve the health of children for generations to come.”

    According to Durbin’s website, the legislation would “close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation to ensure it remains an effective public health tool, and setting the federal tax rate for all other tobacco products at this same level.” It would also “follow the lead of 30 states and Washington, D.C., that have set their own state taxes, by setting a federal tax on these vaping products. The legislation also closes numerous tax and regulatory loopholes that the tobacco industry has exploited for large cigars, smokeless tobacco, and pipe tobacco by shifting production and sale schemes to avoid taxes and oversight, resulting in nearly $4 billion in lost federal revenue between 2009 and 2018.”

    Durbin added that “large cigars, smokeless tobacco, and pipe tobacco remain dramatically undertaxed compared to cigarettes, at a time when their use—especially among youth—is trending at a comparable rate to cigarettes.”

  • Florida Court Expands “Smoking” Definition

    Florida Court Expands “Smoking” Definition

    A Florida appeals court widened the definition of “smoking” Wednesday (Feb. 26) in affirming a judge’s determination that Global Hookah owed the state $1.4 million in taxes. The 2-1 decision said the company wasn’t entitled to recoup excise taxes because its tobacco leaves fell within a state statute’s definition of “other tobacco products” regardless of whether the tobacco was actually smoked by customers.

    Global Hookah argued that its products, which consist of tobacco leaves mixed with glycerol, sugar syrup, and flavorings, are heated, not combusted, and thus should not be considered tobacco for tax purposes. It was seeking a refund from taxes paid between April 2016 to January 2019.

    The First District Court of Appeal ruled that “a fair reading of ‘smoking’ encompassed the process of consuming the vapor that occurs through the process of using the leaves,” and that the state’s 1985 law was intended to tax tobacco products regardless of the details in which they were consumed.

    “As a means to yield vaporized nicotine for inhaling, there is no meaningful difference between combusting cut-up tobacco leaves, on the one hand; and subjecting those cut-up leaves to high heat by burning something else,” Judge Adam Tanenbaum wrote for the majority. “Global’s claim that the vapor from its product differs from ‘traditional’ smoke feels like splitting hairs — the ordinary person, whether in 1985 or today, would not recognize the difference.”

    Judge L. Clayton Roberts dissented, saying, “While there may be policy reasons to tax all nicotine delivery products, we cannot use the intent of the Legislature to effectively amend the adopted text.”

  • EU Commission to Talk Alternative Tobacco Taxes

    EU Commission to Talk Alternative Tobacco Taxes

    Tobacco tax reform is not on the EU’s agenda for 2025, however, the Polish Presidency Council (which sits atop the Commission along with Denmark and Cyprus until June) is looking to move forward with discussions for taxing alternative tobacco products, according to a non-paper seen by Euractiv.

    Unlike cigarettes, alternative products do not fall under the EU-wide excise framework. The non-paper notes that the tobacco market has undergone “dramatic changes” in recent years, with novel products like e-cigarettes, heated tobacco, and nicotine pouches rapidly gaining popularity.

    EU diplomats are scheduled to discuss the matter today as part of the working party on Indirect Taxation. Euractiv reported that sources close to the discussion confirmed that some industry players are mounting pressure on the Commission to tax new products to avoid an outright ban as their regulatory limbo drags on.

    Each country is free to make its own rules in terms of handling tobacco products. For example, France recently banned disposable e-cigarettes and this week reportedly will do the same for nicotine pouches, joining countries such as Germany, Austria, Belgium, and Luxembourg that have already done so. Other countries are looking to take it even further.

    “We don’t just need a smoke-free generation, we need a nicotine-free generation,” Estonian Health Minister Riina Sikkut said. “Many health ministers support this idea. After the pharmaceutical package, tobacco legislation should be next.”

  • North Dakota Votes to Up Taxes on All Nicotine Products

    North Dakota Votes to Up Taxes on All Nicotine Products

    The North Dakota Senate voted 26-21 Monday to raise taxes on tobacco and alternative products. Senate Bill 2281 would raise North Dakota’s cigarette tax from 44 cents per pack to 69 cents, and also impose a 31% tax on the wholesale purchase of cigars and a 28% tax on the wholesale purchase of alternative products.

    North Dakota has not raised taxes on cigarettes in over 30 years and this increase would move the state from the third-lowest to the 10th-lowest state cigarette taxes in the nation. The increases would be used to establish a Tobacco Tax Distribution Fund, which would be slated to provide an estimated $12.9 million in grants to local public health units and $12 million to organizations providing 988 crisis hotline services.

    The bill previously received a 5-1 recommendation to pass from the Senate Finance and Taxation Committee, and now must pass the House and receive the governor’s signature to become law.

  • Philippines to Align Cigarette and Vape Taxes 

    Philippines to Align Cigarette and Vape Taxes 

    The Philippines’ Bureau of Internal Revenue (BIR) said it plans to balance taxes on vape products and traditional cigarettes this year to boost collection. It currently charges P63 ($1.07) in taxes per pack of 20 cigarettes and for every 10 ml of classic nicotine liquids, but other vape devices are charged higher at P109.20 ($1.86) for 2 ml salt nicotine pods. From January to November 2024, the government collected P128.98 billion ($2.2 billion) in taxes from tobacco and P1.35 billion ($23 million) from vape products.

    BIR Commissioner Romeo Lumagui Jr. said that aligning tax rates for both products is a priority for the BIR to maximize collections from the tobacco and vape industries. “I think it will happen this year,” he said. “There will be an improvement, and the drag down of excise taxes on tobacco and vape will not be that big.”

    Lumagui also said the BIR will be destroying confiscated cigarettes nationwide, with vape products to be destroyed once they are inventoried.

  • U.K.: Levies for Vapes to be Unveiled in March

    U.K.: Levies for Vapes to be Unveiled in March

    Credit: TR Archive

    A new tax will hit vapers in the United Kingdom despite warnings it will punish people who have switched to e-cigarettes after quitting smoking.

    The plans for the levy, which will likely increase the cost of vaping liquid by at least a quarter, will be unveiled in the Budget in March.

    A government source told The Mirror it was now almost inevitable that a tax on vaping will be introduced as part of the Spring Budget, which Chancellor Jeremy Hunt will announce on March 6.

    Ministers are looking to copy European countries such as Germany and Italy that already have levies on vapes.

    A 10ml bottle of e-liquid, which a typical vaper would get through in a week, costs around £4 at present. In Germany, a £1.40 vape tax is slapped on 10ml bottles, with plans to double this to £2.80 in 2026.

    Italy, which in 2014 became the first country to tax e-cigarette fluid, charges a £1.10 levy on 10ml bottles.