Standstill on vaping taxes follows in wake of Bulgarian government’s chaotic fall

Tax rates on vaping products in Bulgaria will not change following the resignation of prime minister Kiril Petkov and his cabinet after they lost a vote of confidence.

Politicians had been looking to set gradually increasing rates for e-liquids to run from 2022-2025. For the time being, though, duties will remain at their current levels until at least the end of 2022.

It is possible that Petkov will collect the necessary votes in the National Assembly to form a new goverment, and potentially implement the tax hike. An entrepreneur and economist, he is the co-founder and co-leader of We Continue the Change (WCC), a centrist electoral alliance and currently the largest political group in the Assembly, where it holds 67 of the 240 seats.

However, the fact that 123 Assembly members came out against his cabinet in the latest vote indicates that Petkov could face difficulties in assembling a new majority.

He is currently holding talks with a number of prospective coalition partners. Should he fail to form a new government, the opportunity will most likely pass to former prime minister Boyko Borissov, the leader of the country’s largest opposition party, Citizens for European Development of Bulgaria (GERB), a conservative, populist party which held power from 2009 to 2021. Should Borissov – whom Petkov’s government tried to arrest on corruption charges – also fail to secure a working majority, Bulgarians could head to the polls for a snap election this autumn.

 

Great expectations

 

The state budget bill as it was drawn up would have set a tax rate of BGN 0.18 (€0.09) per ml to be introduced in 2022, BGN 0.19 next year, BGN 0.20 in 2024, and BGN 0.21 in 2025.

The finance ministry told ECigIntelligence that the new excise tax rates on vaping and heated tobacco products were expected to bring in an additional BGN 49m (€25m) in 2022.

“Alternative tobacco products, but not vaping products, have been subject to excise duty in Bulgaria since 2018,” a spokesperson said. “The proposal for the introduction of a long-term calendar covering the 2022-2025 period is a basic tax policy principle and aims to create a gradual and balanced increase in excise duty rates on cigarettes, smoking tobacco, cigars and cigarillos, heated tobacco products and e-cigarettes.”

The new taxes were originally expected to be introduced on 1st July. However, before the vote on the budget one of the issues over which Petkov’s government fell local industry players made efforts to convince the state authorities to delay application of the levy.

During the legislative work on the proposal, deputy prime minister and finance minister Asen Vasilev agreed to change the implementation date to 1st September, claiming this would meet the industry’s demands.

However, Kiril Georgiev, the head of regulatory affairs at British American Tobacco (BAT)’s Bulgarian subsidiary, was quoted by a local news site as saying the industry did not consider the 1st September date realistic and that the earliest acceptable date for the new rates to be introduced was 1st January 2023.

– Jarosław Adamowski ECigIntelligence contributing writer

Photo: Jack Krier

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