European Commission Decides Not To Address Taxes For E-Cigs Or Tobacco Systems

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As the vaping industry expands worldwide, European countries find themselves grappling with how to treat products with regard to taxation. In a recent decision, the European Commission has decided not to add additional taxes of e-cigarettes and other novel tobacco products until further information about the products are available.

This decision comes as big tobacco companies like Philip Morris look to jump into the alternative smoking industry by introducing their own “heat not burn” products, such as the I-Quit-Ordinary-Smoking (IQOS) systems, which are beginning to come to market in several European countries. A statement by an EU executive stated that the commission would re-examine the situation in the next regular report on tobacco taxation, due in 2019.

Limited Information

According to the Commission, due to lack of sufficient information, no excise tax should be imposed on either e-cigarettes or novel tobacco products. E-cigarettes are not currently covered by the directive and the member states asked the Commission to conduct a study to explore the possibility of imposing excise taxes.

Philip Morris, who owns two of the largest cigarette brands, Marlboro and Parliament, recently posted a full page advertisement in the U.K. acknowledging the coming demise of cigarettes in the country, promoting the replacement of cigarettes with reduced-harm alternatives.

This change in focus comes as their new product, the IQOS systems have been successfully marketed in other Asian and European countries as it awaits approval by the Food and Drug Administration here in the US.

Health Debate

“From a health perspective, a cautious approach should be adopted towards a potential harmonised taxation of e-cigarettes,” the Commission’s report states, acknowledging that evidence is building that vapor products in particular are an effective method of harm reduction that it may not be wise to hinder.

According to companies like Philip Morris, the consumption of harmful chemicals from “heat-not-burn” tobacco or heat tobacco is significantly reduced compared to cigarette smoke, since the tobacco does not burn but gets heated at a lower temperature.

However, several studies that have shown these results have been challenged, and in the United States this has resulted in a class-action lawsuit against Philip Morris.

The Commision was hesitant to add any taxation to these products because they have only recently been introduced to Europe, and as late as 2016 were only available in a handful of countries.

“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 their future developments,” the Commission noted.

Tobacco Reponds

Oddly, the big tobacco industry responded positively to the commission's’ decision, going so far as to reinforce the argument that e-cigarettes and their new products are safer than traditional cigarettes.

Giovanni Carucci, Vice President – Head of European Affairs at the British American Tobacco, told Eurativ that e-cigarettes shouldn’t be part of the excise directive because they don’t contain tobacco and should be treated as a normal consumer product,.

“Many scientists and public health professionals are supportive of e-cigarettes and leading public health bodies have said that current best estimates suggest e-cigarettes are around 95% less harmful than smoking,” Carucci said in a statement.