Swiss stakeholders have less than a month left to comment on a proposal by the Federal Council to tax electronic cigarettes at a rate that is 77% less than the levy on regular cigarettes – in line with the lower toxicity of e-cigs.
Opponents say the proposed tax on the nicotine in e-liquids would make vaping more expensive than roll-your-own tobacco and could have negative public health consequences as it would put reduced-risk products out of reach of lower income groups that generally have higher smoking rates.
However, proponents suggest a reasonable tax on vaping products would discourage youth vaping and create expenditure for health programmes while not overly impacting on their use as a harm-reduction tool.
The Federal Council, reacting to a motion adopted by the Swiss parliament (Federal Assembly) in March 2021, proposed a tax of CHF0.02 (€0.19) per mg of nicotine in a bottle of e-liquid. This would add CHF4 (€3.90) to a 10 ml bottle with 20 mg of nicotine.
But that’s almost 60% higher than current prices for e-liquid refills and will make vaping “significantly more expensive” than smoking roll-your-own tobacco, says Philippe Poirson of Paris-based e-cig lobby Sovape.
“I can imagine contexts where smoking would be at a very low level and taxing vaping could reduce its attractiveness without encouraging the consumption of harmful cigarettes,” Poirson told ECigIntelligence. “However, this is by far not the case in Switzerland, which has more than 27% of smokers without change since 2007. Therefore, in this context, taxing a means of avoiding smoking is very likely to be harmful to society.”
The Federal Council says the level of the tax aims “not to discourage smokers who wish to quit from using the electronic cigarette as a possible means of stopping. On the other hand, taxation will have its intended effect, namely in terms of protecting youth.”
“Young adults will tend to forego impulse purchases due to the imposition of easily accessible closed systems,” the Federal Council said. “The price of a typical pack of two spare cartridges with a total capacity of 4 ml, regardless of nicotine content, would amount to CHF2.14 [€2.09] under the proposed tax rate, rising from the current CHF6.90 [€6.73] to CHF9.04 [€8.82]. That is a 31% increase (with a quantitatively unchanged margin).”
The debate continues, but the deadline looms
Disposable, ready-to-use devices or those with non-refillable cartridges and capsules would be taxed CHF0.5 (€0.49) per ml of liquid, regardless of nicotine content. E-liquid refills that contain no nicotine would not be subject to any tax. A 7.7% value-added tax would be applied to all the levies.
The planned tax would bring in some CHF15.5m (€15.1m) a year, which would be used for social services, according to the government.
Poirson, who is also author of the Vapolitique blog, said the Federal Council should have calculated the tax on refill e-liquids against roll-your-own tobacco – both of which involve handling by users – rather than cigarettes. This would have resulted in a “much lower tax” of around CHF0.20 (€0.20) for a 10 ml bottle of e-liquids with 20 mg of nicotine, he added.
He declined to say whether he opposes the idea of taxing e-cigs, noting: “The debate is often sterile if it remains on an opposition of principles: moral versus freedom.” However, he added that “there are many reasons to think that even a small tax on vaping would be bad”.
Poirson also questions the effectiveness of the planned tax in deterring youth from starting to use e-cigarettes – especially in a country where 38% of Swiss people aged 18 to 25 are regular smokers. In addition, the tax would probably make it difficult for the most financially disadvantaged smokers to switch to vaping, he says.
The deadline for the public consultation on the Federal Council proposal is 31st March.
– Jennifer Freedman ECigIntelligence contributing writer
Photo: Yura Lytkin