February 19th, 2015

Fiscal deaths ahead: European Commission wants to tax e-cigarettes

Tumescent tax officials have found something new to tax

What if basic economics tells you that raising a tax on a newer, much safer, product will lead to more consumption of an older much more dangerous product than there would otherwise be? What if the consequence of that tax was to cause more cancer, heart disease and emphysema, and to cause more people to die prematurely?  Would you raise that tax? Would you knowingly cause ‘fiscal deaths’?

The European Commission seems intent on doing exactly that.  The Financial Times (European Commission considers taxing e-cigarettes) reports on a meeting that happened yesterday 18th February 2015.  The meeting agenda document has emerged (PDF) and has set off alarm bells.  This is for a meeting of the Fiscalis Project in which officials from the Commission and EU member states gather to talk about the future of EU taxes. The agenda is troubling in several respects: the loaded questions put to attendees at the meeting; the narrow mis-framing of the issues built into the questions; and the barely disguised policy biases of the Commission officials who drew this up. It is not a neutral open-minded inquiry. It is a first step in imposing taxes on a category of vastly safer alternatives to smoking.

Questions raised by the European Commission

The agenda poses six questions for discussion at the meeting. Here they are with what I think are appropriates answers.

(a) Do you experience problems in your Member State because E-cigarettes and other (new) nicotine containing products are currently not excisable products? (E.g. in terms of decrease of revenue, distortion of competition, lack of regulation, health issues etc.)

Appropriate answer. No, these are not problems, and we should be glad to have them.  We lose revenue when people quit smoking or use pharmaceuticals to quit.  But reducing smoking and related non-communicable disease is the broader policy aim of governments and European institutions.  Governments are trying to prevent death and disease before it happens to save money in the healthcare system, to improve productivity and to help people live longer happier lives (see NHS for example). We normally justify cigarette taxes as an incentive to quit smoking. We would be absurdly cynical if we tried to replace revenue lost when people respond to this incentive by taxing a new category of product that allows people respond to the incentive. There are no distortions of competition because in the most important respect, namely the harm to health, these new products pose 95-99% lower risk than cigarettes. They are completely different so should be taxed differently.   The ‘health issues’ are all positive but would become negative if we raised taxation and so encouraged smoking by adversely changing the relative costs of smoking and vaping to consumers.

(b) What are your impressions of the development and size of the market of E-cigarettes and other (new) nicotine containing products? Are there any signs of substitution of the regular tobacco products?

Appropriate answer. E-cigarette and vapour product sales have been growing rapidly and displacing cigarettes and converting smokers to vaping, increasing quit attempts and improving health. All of this is encouraging, not a cause for concern or for new taxes. However, growth has stalled as hundreds of misleading press stories originating from ideologically motivated health bodies, including the European Commission, have sought to undermine these innovative products and the concept of tobacco harm reduction. The European Union led by DG SANCO has passed an obtuse directive of unscientific, unlawful and arbitrary measures that will do nothing for health, but will slow down the growth of this new rival to cigarettes.

(c) What do you think of the option to adjust the scope of excisable products by including a nicotine-based category? Please elaborate if you think there are more attractive options. (Multiple answers possible and appreciated!)

Appropriate answer. It does not need multiple answers. The simple single answer is that it is an extremely poor idea. These low risk recreational nicotine products should be taxed in the same way as coffee – i.e. as a consumer good, with VAT charged at the standard rate of 20% (UK), and no more.  In fact a more appropriate tax comparator is the reduced rate of VAT charged on pharmaceuticals (NRT sold over the counter attracts a reduced VAT rate of 5% in the UK – this tax treatment is different in each country).  The analysis should start with the question: what is our rationale for raising specific taxes on products like tobacco or alcohol?

(d) What would be in your opinion the best way to achieve fiscal equal treatment between the new category and existing categories?

Appropriate answer. If the question means equalising taxation between the new category and existing, for example by working out what liquid or e-cigarette consumption equates to a 20 per day smoking habit and then equating the burden of taxation, then the question contains a false premise. This is because e-cigarettes and cigarettes are not comparable and should be treated differently, under the principle of non-discrimination:

...the principle of equal treatment or non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (Case 304/01 Sept 2004 Spain v European Commission para 31).

If the justification for taxing tobacco at much higher rates than other consumer goods such as coffee is the high level of harm caused to users and others, then these new products should be taxed in proportion to the risks they cause. In the case of e-cigarettes this is likely to be about 95-99% lower than cigarettes. Or perhaps they should be negatively taxed because of the net health benefits they create when people switch from smoking to vaping.

(e) What could be a way to monitor and control the new category of excisable products (think about IT tools, laboratory testing, markers etc.)?

Appropriate answer. This question is premature and should follow deeper consideration of the issues of principle. However, the immense bureaucratic burdens of the Tobacco Products Directive (2014/40/EU) will provide more than enough data to satisfy the most pedantic tax inspector. Officials need to understand the category better and take a wider view of policy objectives, not get to work on the details of how to levy a tax well before any agreement in principle to proceed. In fact, these innovative disruptive products need the benefits of free movement of goods in a frictionless internal market, not a system of bonded warehouses and weights and measures officials charging taxes. Please read this Summary for Policymakers on science and policy aspects of e-cigarettes and vaping before having any further discussions.

(f) Identify weak points or problematic issues related to the new category (e.g. easy to circumvent by development of new products, lack of monitoring and control, internet sales, import/export from/to third countries etc.)

Appropriate answer. The main weak point is the one-sided nature of the framing of these questions and their discordance with the reality of what these products are, how they are used and why. The main weak point in European Union policy is to treat these products as though they are a problem rather than an opportunity, both through arbitrary and disproportionate regulation, and now through suggestions of counterproductive taxation.  The agenda for the meeting reflects the Commission’s tendency to competence creep; the habitual failure of meetings like this ever to say “no, we really shouldn’t intervene“; the reactionary and anti-innovation culture of the EU; the poor scientific understanding increasingly underpinning EU policy; and an insular and narrow approach to policy making that serves no-one well.

Questions not asked by the European Commission

Not only were the questions posed highly loaded, but the questions not asked were also revealing. Here are some:

  • Is there a justification for EU harmonising action in this area under the treaties (TFEU article 113)?
  • What is the rationale for taxing tobacco at a higher level than other consumer products, and to what extent does this rationale apply to e-cigarettes and vapour products?
  • What is the underlying model of nicotine using behaviour without which we will be unable to assess impacts, and what are the cross elasticities between these products and tobacco products?
  • How many ‘fiscal deaths’ and additional cases of serious diseases would be caused in the European Union if ‘tax treatment was equalised’? What trade offs should we make between increased fatal disease and gathering more tax revenue?
  • What are the likely knock on costs to the health care system?
  • How many small and medium enterprises would fail?
  • How can we diversify tax revenue to cope with any decline in tobacco taxes in a way that minimises welfare loss, rather than just finding something similar-looking and taxing that even though it is very different?
  • Given liquids are easily concealed and traded across borders or informally, would enforcement costs exceed revenues? What size of black market or DIY market would we be willing to tolerate?
  • How do we reconcile the wildly different tax treatment applied to different ways to stop smoking, for example 5% VAT on NRT and no VAT on prescription stop smoking medicines?

FOI request for background presentation

I have made a freedom of information request for the introductory presentation made by the Commission (agenda item 4) and will share it here when it arrives, no later than 12 March 2015 (15 working days from submission on 19th February).  See FOI request at Ask the EU.

European Union tobacco tax policy – how it works

Process for agreeing EU tax legislation. The European Commission does not, in isolation, determine excise duties on tobacco and cannot unilaterally impose a tax on e-cigarettes, personal vaporisers or e-liquids.  As with all significant EU legislation it has to be agreed by the Member States – for tax policy the Council is the sole legislator. In the case of taxation at EU level, it has to be agreed under a Special Legislative Procedure by unanimity, so each Member State has a veto. See overview of tax legislation in the EU. Unlike the Tobacco Products Directive, which was agreed under the Ordinary Legislative Procedure,  for legislation on taxation, the European Parliament just gives an opinion and cannot vote it down or amend proposals.

Form of EU tobacco excise duty legislation. The EU sets a legal framework for excise duties on tobacco with authority drawn from Article 113 of the Treaty on Functioning of the European Union.  The current primary legal instrument is Directive 2011/64/EU. This directive does not set actual duty rates, but prescribes the type of duties, range of rates and other constraints than must be applied by Member States in setting tobacco duties in national legislation.  So in practice there is an EU framework agreed by unanimity that allows Member States considerable discretion in the structure and level of tobacco taxation.  Three types of duties apply: specific duty (a fixed amount per 1000 cigarettes, currently £184.10); ad valorem duty (a fixed percentage of the final selling price, currently 16.5%); Value Added Tax, currently 20%.

cigtax

Structure of taxes on 20 cigarettes based on duty and tax rates from HMRC at Feb 2015 – 82% of the retail price is tax

 

Why does the Commission’s posture in this meeting matter?

Although the Commission does not decide, it has power to initiate legislation and what it intends and proposes becomes the default focal point of negotiations between Member States. We saw this with the Tobacco Products Directive, much of which is little changed from the proposal the Commission made in December 2012.  We also know from the Tobacco Products Directive that member states tend to prize a poor agreement over no agreement, so although they may have vetoes Member States will often be reluctant to use them, even if they don’t like what’s on the table.  These ‘collective action’ effects mean that the Commission has more power and influence than it appears to have on paper.

40 comments to Fiscal deaths ahead: European Commission wants to tax e-cigarettes

  • Good day! I could have sworn I’ve visited this website before but after browsing through many of the astrology posts I
    realized it’s new to me. Nonetheless, I’m certainly delighted I stumbled upon it
    and I’ll be book-marking it and checking back frequently!

  • David Sweanor

    This newly published Perspectives piece by Frank Chaloupka, Ken Warner and me in the New England Journal of Medicine addresses the importance of differentiating taxation based on relative risk:

    http://www.nejm.org/doi/full/10.1056/NEJMp1505710
    and here:
    http://tobacconomics.org/research/differential-taxes-for-differential-risks-toward-reduced-harm-from-nicotine-yielding-products/

    Hopefully it will help focus attention on issues raised in this post and facilitate better informed discussions on fiscal policy directions.

  • […] Nikotinsteuer ist keine Lösung). Eine ebenso herausragende Analyse hat Clive Bates unternommen (Fiscal deaths ahead: European Commission wants to tax e-cigarettes). Er hat auch eine entsprechende Transparenzanfrage an die EU-Kommission gestellt, deren Verlauf […]

  • Roger Hall

    The £12 billion a year that the UK receives from tobacco tax is the equivalent to an additional 3p on the basic rate of tax. The future potential abolition of tobacco smoking by ecigs and the subsequent tax revenue loss incurred would therefore fiscally affect all of the electorate, as opposed to the current 20% of smokers, in that smokers effectively subsidise the non smoking electorate. Politically it’s far easier to tax smokers/vapers than increase taxes for all the electorate. The taxing of tobacco products is part of EU law insofar as tobacco products come under WHO’s TCFC, which has been ratified as part of the EU Lisbon Treaty. Subsequently if ecigs are declared as tobacco products then the EU is legally mandated I believe to tax them in the same way as tobacco. Big T already have the collection mechanisms in place to collect this tax, so for Govts maybe the issue is that Big T are best placed to collect the tax, hence the seemingly political preference for Big T’s closed systems, as the quid pro quo is Big T control ecigs and Govt then have Big T as their unofficial tax collectors? Insofar as Big T’s business model is concerned they only generate c.£0.08p in net profit per 20 cigarettes sold globally, so regular repeat addicted customers are their prime concern. Without the competition of open systems comprising separate batteries, tanks and e-liquid this business model can in theory be replicated with ecigs if necessary and their biggest long term fear must be open systems, where brand loyalty simply isn’t so prevalent.

  • Jim

    I despair if this goes ahead. Governments are basically agreeing to heavily tax you for no justifiable reason, on something they have little proof is harmful to health. I live in the UK, and was never a EU sceptic, until now. Looks like the the big tobacco firms win again. We will be restricted to rotten flavours and lousy devices from big companies. Why not raise revenue by taxing bleach?
    These people don’t care about our health.
    The movie ‘V for Vendetta’ springs to mind – will people finally get fed up of being pushed around when they are doing no harm?

  • Guy Eaton

    Clive

    does this mean at least that there can be both medicinal and recreation versions available on the market?
    The reason I ask is not only out of interest but practical reasons. I have used such products for 6 years (have not smoked for 6 years!), but the product I am using I think will be banned under either regulation! I also know at least 30 people who have quit using the same product (tanker system – 30mg nicotine – highest strength is 40mg using pharmacopeia VG and nicotine – rich and menthol flavour). One friend I have used to smoke 60 cigarettes per day and has not smoked for 2.5 years using the 40mg rich and menthol liquid. I have to break the news to them that the products will no longer be available – some will start smoking again – this will probably be a death sentence for some of them. Do we stock pile? When will these twin strict regulations come into place? I don’t think I will smoke again as have been off cigarettes for a long time but am worried not having a safer viable alternative to smoking. It scares me a little as my Father died from lung cancer and died very slowly and painfully. I desperately don’t want to smoke again.
    I agree, albeit some US foreign policy, this policy making probably is an example of some of the worst policy development ever formulated! It is illogical, not evidence-based and is even anti competition / business giving tobacco companies unfair competitive advantage. These policies will lead to ineffective products that are most importantly less accessible with less choice. It is almost as if albeit the obvious reasons for the TPD and MHRA regulations (i.e. multinational Company profits / lobbying and Tobacco tax revenue)these policies and propaganda act as a diversion tactic for not really doing anything about smoking in a era where it has to be shown that you are doing something. It appears that you are doing something positive policy wise about cigarettes, unfortunately it only applies to e-cigarettes! Many think they are the same thing. A couple of months ago I had to inform a nurse that e-cigarettes are not cigarettes and contain no tar or CO, etc. They were astonished as they had been banned in this particular hospital, and consequently forced the patient back to a 30 a day habit. The name is most unfortunate – EC should be called glycerine & nicotine vaporisers (GNVs). Actually they mostly contain VG or PG not nicotine, which is completely harmless!!!!

    • Irish Lass

      Guy,
      as far as I understand it, it will be possible to have both types available on the market, though as yet not many have applied for medicinal approval (probably because of the cost of doing so). As for the higher nicotine levels, I guess those who need such strong e-liquids will have to hope that the Totally Wicked challenge to article 20 in the European Court is successful and results in a new approach to regulation of e-cigarettes and liquids that allows the higher strengths. If you want to show support for the legal challenge go to the Totally Wicked website to do so. There is also a very good video on there featuring Clive interviewing the head of TW and his lawyer about the reasons for the challenge and what its all about.

      • Guy Eaton

        Thanks for your response – at least two types will be available albeit very limited products as I guess the EU has Sovereignty! The liquid i use has been developed to have no impurities in it (made to a medicinal purity) but with the option of having a liquid that was a strong puff for puff as a cigarette in terms of nicotine delivery – that is in fact the whole point re. an alternative. You can absorb the same amount of nicotine as you had when smoking but with non of the cocktail of poisons. With limited nicotine the products become akin to an NRT albeit with a possible placebo effect of the vapour etc. Yes I will support the above!

  • Guy Eaton

    Aren’t the MHRA regulations due to come into force re. all NCPs have to be licensed as a medicine including E-cigarettes? This issue is even more impendingly damaging to users, the EC industry and the THR approach in the UK?

    • Clive Bates

      The MHRA announcements of June 2013 were superseded by the EU Tobacco Products Directive Art 20. This establishes a ‘twin track’ where the manufacturer or importer can choose between meeting the requirements of either the tobacco directive or the medicine directive… at least that’s the intention in the UK. Neither is fit for purpose, both represent incredibly poor policy-making.

  • […] et maintenant arrivent les projets de taxes, le « deal » est en marche + Lire l’article (en […]

  • Irish Lass

    This is bad. Avaaz has a good history of using petitions to put pressure on politicians to do the right thing. I’m wondering if an early petition would be useful in this case. If so, who would be the best people to send it to? Any thoughts/ideas/advice would be welcome.

  • Clive Bates

    Well it is quite possible the minutes haven’t been written yet. The access permitted is assumed to be everything, but subject to a series of rxemptions. The bureaucrats artfully try to apply exemptions to documents they don’t wish to release.

  • Sean C

    Interesting but not surprising that their first concern is decrease in revenue. (5(a) on PDF)

    Clive, how come you didn’t put in a freedom of info request for the minutes or at least the conclusion of the meeting? Why just the intro? Are we not allowed access to that info?

    I just found your site by the way – will be coming back regularly. Keep up the good work.

    Sean

  • Nothing new for Italy, where we have a € 3,73+VAT 22% tax on liquids with or without nicotine.
    I don’t think it will stay at thins level, and especially for liquid without nicotine, where you’re taxing something you can buy everywhere with no control.
    But the risk is, I agree with you Clive, to stop the expansion of the e-cig towards smokers to save thousands of life.
    I would highlight that the discussion on e-cig tax always avoids a wide debate, both in Italy (limited to the Government – which made the proposal – Finance Committees, which excluded tor equest an opinion to the Health Committees) and now the EU Commission, where they talk about it around the excise Directive.

  • […] Zoals te verwachten was, is er een nieuwe melkkoe […]

  • john

    It was exactly the appeal of increased taxes (and increased jobs) that drove the end of prohibition in the USA.

    I do also agree that taxing the personal importation of a product that is so web friendly will be, in practice, not cost efficient. But heck, these are the guys who gave you, and Greece, the Euro…

  • nikki from mars

    It’s likely the plan for moves towards taxation was always what was intended to bridge the gap between lost finances from tobacco sales lost to vaping. This is totally unacceptable and immoral as it will inevitably lead to more deaths from smoking related diseases. Although experienced vapers will easily circumvent the new legislation should it pass newer starters or potential starters are likely to continue to be trapped in the smoking and failed nrt attempt cycle for longer or permanently… gar more likely. .. there can be no adequate justification for these underhand methods.

  • Dodderer

    Just a possible different slant – a year or so ago,PMI invested US$680 million in a heat-not-burn cigarette manufacturing plant in Bologna Italy.I presume they will seek authorisation as a novel tobacco product with similar levels of tax/duty as cigarettes.It will greatly help the product if all its competitors suffer the same level of pain (I would guess PMI had ‘arranged’ the authorisation/tax regime prior to making their investment)

    • Jon Fell

      Dodderer – I need to check the exact terms, but the new excise regime in Italy explicitly gives products like PMI’s HeatSticks an excise advantage compared to conventional cigarettes. And they also have an excise advantage in the other test market, Japan. Something worth pondering is whether tobacco companies selling reduced-risk products are pushed towards a different position on excise compared to non-tobacco vapour companies. By which I mean that if the tobacco industry came out and argued for no excise at all on novel products some people – probably including govts and health departments – might think they were making a cynical move to gain commercial advantage (or ‘addict more people to nicotine’) by effectively trying to replace sales of a high-priced, high-excise product with a lower-price, low-excise one.

      Of course, it’s more complicated than that because excise can also help protect industry profitability. But I also wonder if, in the end, building in some excise to novel products, including e-cigs, might help cement these products as being more legitimate in govt eyes. Clive writes that it might be ‘absurdly cynical’ to replace lost revenues in this way, but there are plenty who argue that government’s financial stake in the tobacco industry has had some influence on attitudes towards e-cigs.

      A final point – snus is taxed quite heavily too, though not so much that an average can of snus doesn’t still have a significant price advantage versus a pack of cigarettes (while still allowing manufacturers to make attractive margins). In Sweden and Norway the excise burden on snus hasn’t stopped snus gaining at the expense of cigarettes, even if that growth might have been faster in the absence of excise.

  • So they have decided to give free rein to electronic cigarettes, but by charging a tax that does not justify (not producing associated damage). As much as taxes seduce in the short term (and money to sell or “cure”), as a society we are interested in protecting our health, and if we do the better, not only in money, but in common wellness we will be rich.They seem disregard what economist Bastiat had explained decades ago: breaking a glass may appear a good engine for the economy as it brings employement to the glazier, but any damage done to society produces an impoverishment of that society, because the money that is paid to the glazier is not paid to another professional to do something constructive and not just repairing destruction.

  • Guy Eaton

    I have to ask can the EU be trusted in general with other policies / legislation: it cannot be just on EC that they formulate disastrous policy and law? I always used to be very pro EU.

    • Chris Price

      The EU is the world’s most successful corruptocracy – its purpose is to protect governments and major industry by isolating policy from the democratic process. It is a new form of federal entity that currently has no identifying name, but neo-communism is the closest label. The basic principle is that by assigning decisions to a higher authority, an individual government does not have to defend profitable policies at home, since the federal power has imposed the policy and cannot be challenged. It doesn’t matter how damaging the policy may be to the public interest because the whole point of the arrangement is to protect government revenue, protect major industry incomes, and provide stability by this proven method. Stability is the keyword, and due to Europe’s history of almost permanent war for the last thousand years, governments are more than willing to put up with some problems in order to avoid war – which in the end is what the EU is all about.

      Unfortunately, someone has to lose, and it’s always the public. They pay the bills, in return for protection from war. The power of the federal state is built on maximising revenue, controlling production, and stabilising all pressures. You can see very clearly that no one is going to challenge this arrangement, in reality, because of the huge benefits: no wars, stability of government, full control of production revenue, and removal of any threat to the system.

      Public action to change revenue creation is not permitted. Small business is deliberately repressed. These things are core principles of neo-communism, since stability comes from, well, stability.

      This should be abundantly clear from the 23 year old EU Snus ban, which kills at least 10,000 UK citizens a year without even a tiny protest. Eventually, THR bans and taxes will remove all threats to cigarette sales, and the EU itself will be responsible for at least half of the 700,000 annual smoking deaths that (it claims) take place in the EU.

      Tobacco (or more accurately, the cigarette) is the goose that lays the golden egg and will be protected until the last dying gasp of the EU. If this is not clear from their statements then it is wise to consider the 1st rule of politics: what is said in public is likely to be the opposite of actual policy or at least the mechanism used.

      Smoking makes governments and major industry rich. The UK government for example is a >90% stakeholder in tobacco sales, and you buy 18 cigarettes of the pack of 20 directly from the government. In reality, you buy government tobacco, and this trade is well-protected at EU level as it significantly supports government and so many major industries and pressure groups. (For example, it is clear that, in the UK, the pharmaceutical industry makes more than the tobacco industry does from smoking.)

      This being the case, you should probably be rather pessimistic about any EU or government initiative to ‘reduce smoking’. Remember the first rule of politics.

      The smoking/health area has the world’s largest propaganda machine and the cost of running that does not come out of a few ideologist’s pockets – it’s paid for by governments and industries who need to protect the tobacco money machine. The ideologists are just the tools used in a situation where once the 20% Prevalence Rule operates, the only threat to the gravy train is THR.

      Looking at the details of how the machine protects itself is interesting, but ultimately of little value: the machine is the problem, not how it swats the flies that irritate it. Plan A was an ecig ban by means of pharmaceutical classification. That failed, so Plan B is an ecig ban by means of a tobacco classification, massive regulation, and high taxes. Actually, Plan B is a better option for them all round, and since these people are hardly the stupidest dimwits in the world, Plan B was most likely the primary option all along. A clever redirection game made Plan B an inevitable victory. These people are masters of the game, and they played the pawns employed to push Plan A just as much as anyone else. To see how they play the game, look up ‘maskirovka’, it is the major principle used here.

      Welcome to the new world order. Actually nothing has changed, of course, the Kremlin just moved westward a bit to Brussels, and the Reichstag moved north-east to Moscow. It’s business as usual.

      There are no European wars but someone still has to die for the cause (and pay unjust taxes), and that’s you.

  • Guy Eaton

    Interestingly, if the EU taxes EC after the TPD is implemented they will not get that much tax as the products that will be available are not ones that are bought and used by most genuine vapours! They are so stupid that will ‘shot themselves in the foot’!!! Why don’t they just permit the sale and use of products that are most commonly used by long term vapours (and by definition are effective) and tax those lightly? It is a complete no brainer!

  • The way these questions are slanted,makes you think they are only interested in finding a new way to tax ecigs❗
    It reminds me of a statement of the great Henry Ford,”You can have any colour,as long as it’s black”!

    • Guy Eaton

      Well this at least a significant reason as there is no evidence to back regulating as they propose – also fundamentally ECs are not a tobacco product (they don’t actually contain any tobacco) so there has to be some obvious reason for forcing them into this category…TAX.

    • Simon

      The EU have essentially decided that quitting smoking is tax evasion…

  • Guy Eaton

    Interestingly, I don’t know if people are aware but vapours in Germany, for example, are ‘stock piling’ liquid (much of it made by themselves) pending EU regulation. Obviously, this liquid will be made to a low standard of purity, thus, the EC liquid industry is now going underground and thus will be less safe (although I am sure much safer than cigarettes). Obviously the genie has been let out of the bottle and cannot be put back so there will be black market products.

  • Anonymous

    Every tax has its optimum point of creating revenue; taxing less obviously creates less revenue, but imposing a higher level of taxation also since more and more people will perceive the tax as unfair and will try to dodge that tax. With vaping dodging the proposed monster tax is very easy, even if a euro-unified system of tamper free and leak free filling will be imposed. For as long as the devices are not encapsulated in one meter of reinforced concrete everything can be refilled with any liquid one chooses. So one important question the commission didn’t ask is ‘what level of taxation will be perceived as fair and just?’. And it looks that level is much closer to the level of taxation of coffee than the one of tobacco. One can increase that level of acceptance by demonizing the taxed product, but in this case I doubt very much this will work. The commission is powerful, but even with a Stalinist level of reinforcement they will not be able to change the basic laws of economics. The commission is having a wet dream at the moment but the economic reality will catch up with them very soon once they try to implement their wet dreams of lining their pockets at will and at the expense of our health.

  • steffijade

    “They”have been dragging their heels on this front but it was kind of inevitable that taxation would appear at some point. Anything even vaguely related to smoking is seen as fair game because they have the public brainwashed to believe that nicotine is the harmful ingredient in tobacco. It’s still an absolute disgrace, inevitable or otherwise. The prospect of current smokers being further deterred from trying vaping because eliquid would be ‘sin’ taxed is galling. This on top of the concerted media smear campaign we’ve seen of late will put far too many current smokers off vaping. It’s a cynical rejection of THR (unless big pharma products are used of course), in favour of the ‘quit or die’, demonisation model that many in tobacco control cling to like a tramp to a can of special brew. It’s an abuse of the position of tobacco control to favour ideology, control and the ability to demonise/belittle the public that don’t subscribe to ‘quit or die’ and of course, to create a nice little partnership of profit for government and the pharma industry… regardless of how much of a negative effect it might have on smokers/vapers. They’re just expendable scum anyway, right? As long as the profit/revenue keeps rolling in that’s all that matters. It’s time to start getting more militant.

  • It’s astonishing to me that the EU Commission is still getting this so wrong. Nothing comes from nowhere and so I have to question the starting point that led to these questions – I think its clear from their framing what they’re trying to achieve. Is it purely monetary (from a lost tax point of view) or, as is surely the case with Snus, is there another agenda?

    • Clive Bates

      Liam, I think it’s likely to be about as mindless or as cynical as the snus ban, which the Commission still doesn’t see as a problem (or at least that’s what it tries to argue, very unconvincingly).

  • Jonathan Bagley

    It’s sad but was always likely. I’ll not be losing much sleep because, as you point out,

    “Given liquids are easily concealed and traded across borders or informally, would enforcement costs exceed revenues? What size of black market or DIY market would we be willing to tolerate?”

    One year’s supply amounts to 400ml, less than a beer bottle, of 72mg nicotine concentrate, which, if not mixed with flavours will keep in the freezer for several years.

    • Clive Bates

      The problem isn’t with the experienced vapers finding supplies of course. The will never pay these taxes. The problem comes with trying to widen the user base and increase switching – this damages the cost effectiveness of the legal and simple entry points to the category.

      • john

        Clive you might be wrong on this one:
        A few Christmases ago I happened to go into the large backroom of the local post office of the, small, bush community I live in. I suddenly realised that that large room was, literally stacked to the ceiling with all sorts of parcels (including things like stove-tops)that had been purchased off-shore and were awaiting pick-up delivery.

        Going off experience down under, the use of the web for small to medium purchases of all kinds from offshore sources has become the norm for a wide slice of the population(not just the better educated, better off).

        • Jonathan Bagley

          I agree with John. The problem won’t be the less educated and better off not taking up ecigs. It will be injuries from exploding ecigs. Look on ebay or Amazon. There are hundreds of “shisha pen” vendors and some of the products are very cheap..

        • john

          Johnathon
          hopefully many people will take the time to view the many YouTube tutorials on the range of e-cig devices; by now there is a sort of open university of tutorials on the subject.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>