EU proposes tax policy on new tobacco products

The European Union is set to propose a new electronic cigarette tax policy across the EU, as part of a reform of tobacco taxation. According to a draft document from the European Commission, the new regulation would also double the consumption tax for member states with lower cigarette taxes. This move has been long anticipated.

The update to the EU Tobacco Tax Directive in 2011 will now include new smoking products such as electronic cigarettes, e-cigarettes and heated tobacco products, which will be taxed in comparison to combustible cigarettes. This approach stems from global policy-makers' increasingly ambiguous views on the popularity of new products among young people.

Products with high nicotine content will be subject to at least a 40% consumption tax, while low-intensity electronic cigarettes will be subject to a 20% tariff. Heated tobacco products will also be subject to a 55% tariff, which translates to a tax rate of 91 euros per 1,000 items sold.

As part of Brussels' efforts to reduce smoking rates, the European Union will legislate to increase the minimum consumption tax on cigarettes from 1.80 euros per pack of 20 to 3.60 euros, which will raise prices in Eastern European countries.

According to Alberto Alemanno, a professor of EU law at HEC Paris Business School, the lack of an EU-wide consumer tax framework for electronic cigarettes and heated tobacco products is causing a weakening of tobacco control efforts across the European Union. Alemanno made this statement to the Financial Times in the United Kingdom.

In countries with lower relative incomes such as Austria and Luxembourg, cigarette taxes will also significantly increase. The hike in cigarette tax is expected to bring an additional 9.3 billion euros in revenue to EU member countries.

These changes aim to accelerate the European Union's efforts to achieve a "smoke-free generation" by 2040. As part of the EU's plan to combat cancer, health officials hope to reduce tobacco use among EU citizens from the current rate of about 25% to 20% by 2025 and below 5% by 2040.

This month, the committee implemented a ban on flavored heated tobacco products to curb the surge in demand from young consumers. In the United States, regulatory agencies under the Food and Drug Administration have taken action to prohibit popular electronic cigarette products, such as Juul.

Peter van der Mark, Secretary General of the European Smoking Tobacco Association, has warned that "a sudden drastic increase [in taxes] would create a market for illegal trade". Dustin Dahlmann, Chairman of the Independent European Vape Alliance, added that taxing new tobacco products could lead to "less harmful alternatives" being taxed too heavily and thus encouraging smoking in many countries.

A leaked impact assessment report suggests that an increase in the lowest excise tax in EU countries with lower cigarette prices such as Bulgaria, Slovakia, Poland, and Hungary would have a "strong impact on consumers and economic operators." The assessment also notes that imposing a consumption tax on new tobacco products that are "particularly attractive to young people at risk of addiction" would help reduce tobacco use in public health efforts.

The proposal must receive the agreement of all European Union member states before being written into law. British American Tobacco is one of the world's largest cigarette manufacturers and emphasizes that this is "the beginning of a lengthy legislative process.

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