Italian Parliament to Investigate Tobacco Taxation and Regulation Policies

According to a report by Sigmagazine on September 17, the Italian Chamber of Deputies' Finance Committee will launch an investigation into the taxation and licensing system for tobacco products and new tobacco products on the afternoon of September 18 local time.

The Italian Tobacco Retailers Association (Unione Italiana Tabaccai, Uit), Tobacco Retailers Association (Assotabaccai), and Italian Federation of Tobacco Retailers (Federazione Italiana Tabaccai, Fit) will be presenting at this parliamentary session.

It is expected that on September 19th, the committee will decide on the next group of participants for the hearing, including three associations from the Italian e-cigarette industry - the street retail association (Uniecig), the e-commerce association (Aive), and the production and retail association (Anafe). The chair committee may also add other organizations and stakeholders as needed. This marks the first time in Italian political history that the industry has been formally invited to dialogue, acknowledging its status as an official dialogue partner, a development that has never occurred before.

According to reports, traditional tobacco products in Italy, especially cigarettes, are gradually losing market share, while new tobacco products have seen their market share skyrocket from 4% to 18% in just four years (from 2019 to 2023). The European Commission has stated that there is currently no uniform regulation on new tobacco products in Europe, leading to tax disparities and even encouraging cross-border purchases and smuggling.

In response to changes in consumer behavior and sales trends, lawmakers in Italy have redesigned the tax system for tobacco products. During the 17th parliamentary term, in addition to reforming the taxation structure and standards for manufactured tobacco, consumption taxes are also being imposed on alternative e-liquids in non-combustible inhalable tobacco and e-cigarettes. The consumption tax rates for these products have been adjusted several times in recent years.

The 2020 fiscal bill also introduced a consumption tax on tobacco accessories, such as filters and rolling papers. Starting from May 1, 2024, e-cigarettes containing no nicotine will also be subject to a consumption tax.

The House Committee therefore believes that it is beneficial to conduct an investigation to understand the integrity of the tobacco industry chain and the evolution of the tax system. In addition, it is necessary to evaluate the phenomenon of illegal sales and smuggling. A report by the Italian Tobacco Merchants Association (Fit) pointed out that the total value of the illegal tobacco market exceeds 1 billion euros, resulting in the country losing approximately 620 million euros in tax revenue, and tobacco merchants suffering losses of around 120 million euros as a result.

The committee must complete all of its work by December 31, 2024.