Governments around the world are waking up to the potential of taxing e-cigarettes, according to a new report from ECigIntelligence.
Thus far, only Portugal, South Korea and two U.S. states – Minnesota and North Carolina – have successfully implemented e-cigarette taxation, although Italy is also in the process of implementing a new tax.
Most current proposed and implemented regimes take the form of either a percentage tax on the wholesale price of the product, or a flat-rate tax based on the volume of nicotine-containing liquid.
“We believe the concept of a flat-rate tax based on the volume of nicotine-containing liquid, as recently implemented in North Carolina and Portugal, represents a major step for the regulation of e-cigarettes given the relative ease with which such a tax can be imposed,” says Nick Wenbourne, director of ECigIntelligence’s regulatory analysis team and author of the report.
Italy, meanwhile, is “openly seeking to recover a proportion of lost tax revenues from declining tobacco sales,” Wenbourne says. “We believe this may be attractive to many jurisdictions.”
The fact that these taxes treat e-cigarettes as a separate category from conventional tobacco products is also significant, the report says, and could set a precedent that is followed by other regulatory efforts.
What This Means: As governments seek to replace falling revenues from taxes on conventional tobacco – caused by decreasing numbers of smokers – e-cigarettes represent a logical place to turn. We should expect to see many more e-cig tax proposals over the coming year.
– Freddie Dawson ECigIntelligence staff
Photo: Austin Kerr
ECigIntelligence does not provide legal, strategic or investment advice. Tamarind Media Limited, the publisher of ECigIntelligence, does not accept any liability or responsibility for information or views published.
Please see this page for a detailed description of our methodology. Please Contact us for a detailed description of our methodology.