The European Commission announced it would hold off on a measure to tax electronic cigarettes uniformly across the European Union, claiming that it had insufficient data to come to an informed decision.
The European Commission announced Friday it would not yet work on a harmonised approach for excise taxation of e-cigarettes and other new tobacco products. The commission submitted its decision in response to a request from the EU’s Economic and Financial Affairs Council to review a directive from 2011 in order to include e-cigarettes and “heat not burn products.”
Prompted by evolutions in cigarette trafficking and the rising use of e-cigarettes, the EU Council asked the executive in March 2016 to come up with a proposal on the revision of the Tobacco Excise Directive and explore the possibility of imposing new excise taxes. Regarding e-cigarettes, the Commission stated the information available was insufficient to introduce a common excise tax or any other form of additional taxation.
“Given the novelty and evolutionary nature of the market, it would be extremely difficult at this stage to develop a harmonised explicit definition which captures these products both as they appear now and as they may develop in the future,” the Commission noted, adding there were several opinions about the health effects of e-cigarettes, as well as their appropriate tax treatment.
The industry expressed its satisfaction with the Commission’s cautionary approach. Giovanni Carucci, Head of European Affairs at British American Tobacco commented: “E-cigarettes shouldn’t be part of the excise directive because they don’t contain tobacco. Instead, they should be treated as a normal consumer product, subject simply to VAT as is the case in the majority of EU countries such as the UK, Germany, France and Spain.”
The European Network for Smoking and Tobacco Prevention was less enthusiastic. The public health organisation once more cited a World Health Organisation report (August 2016), which found that there were possible risks from active and passive exposure to electronic cigarette vapour. For anti-tobacco campaigners, “taxation is the best measure to prevent people from taking up smoking” and “harmonisation of excise taxes at the EU level will decrease the affordability and attractiveness of those products.”
The EU executive pledged to re-examine the situation in the next regular report on tobacco taxation, due in 2019.
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