There are two ways to tax e-cigarettes (e-cigs) : direct and indirect taxes. Taxes and categories of nicotine makes sense in that you first establish how to segment this new industry, then raise taxes fairly. Currently there are five jurisdictions that tax nicotine containing liquids or e-cigarettes. In the US there are Minnesota and North Carolina, in Europe theres Italy and Portugal, in Asia there is South Korea. In the main most other countries raise taxes on e-cigarettes through indirect taxes such as sales tax.
How are each dealt with?
Take South Korea, the government made a new category and added an excise tax of $1.09 per one milliliter of e-liquid and started collecting as of January 2015. Portugal also levied a tax in January along with a new category, of 0.60€ per ml. North Carolina established a “Vapor Tax” of USD 0.05 per 1 milliliter of nicotine-containing liquid. In the same vain Italy started in January with a new category and yield of 0.37 € per ml. However something rotten brews in Italy. While the new levy doubles the prices of e-liquids it helps giants such as Philip Morris International. Why? Simply because it puts the same levy on tobacco products such as Marlboro HeatSticks. This coincides with Philip Morris launching a 500 Million Euro factory in Italy.
HeatSticks vs E-cigarettes
Many scientists agree that e-cigarettes are probably safer than conventional cigarettes. However other new devices such as Marlboro HeatSticks do use tobacco and have not yet been tested to the same degree. Unless studies prove they are as safe as e-cigs, e-cig firms say, they should not be taxed at the lower rate in Italy.
Valerio Forconi, Corporate Affairs and Legal Director in the Italian branch of tobacco giant Imperial Tobacco, says the principle of the tax is wrong.
Fontem Ventures, a subsidiary of Imperial, plans to launch a new e-cig in Rome in March. While they do not object to the new tax they strongly disagree that HeatSticks are treated the same way.
This makes Italy perhaps “the only country in the world” that effectively gives Philip Morris a tax discount on smoking.
