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