EU: Proposal for an excise tax on e-cigarettes and heated tobacco products

EU member states have asked the European Commission to bring new tobacco products, namely e-cigarettes and heated tobacco products, under the EU Tobacco Excise Directive, meaning they would be taxed like traditional tobacco products (source (Euractiv). The current provisions of the Directive 2011/64/EU have become less effective, as they are no longer sufficient or too narrow to address current and future challenges regarding certain products, such as e-liquids, heated tobacco products and other types of new generation products entering the market. It is therefore urgent and necessary to modernise the EU regulatory framework, in order to address current and future challenges regarding the functioning of the internal market by harmonising the definitions and tax treatment of new products (such as e-liquids and heated tobacco products), including products, whether or not containing nicotine, that are substitutes for tobacco, in order to avoid legal uncertainty and regulatory disparities across the EU. Although new tobacco products are regulated under the Tobacco Products Directive focusing on the health aspect, there is currently no EU-wide tax framework, as is the case for traditional tobacco products. The situation in the EU single market is quite fragmented, with some Member States taxing e-liquids and heated tobacco products at different rates while others do not tax them at all.In January 2018, the lack of sufficient data prompted the European Commission not to propose a harmonised approach to the excise tax on e-cigarettes and other new tobacco products until more information on these products became available. However, in February 2020, the executive published a report stressing that for these new products, the lack of harmonisation is undermining the proper functioning of the internal market. The current lack of harmonisation of the tax regulatory framework for these products also limits the possibility of monitoring their market developments and controlling their movements. The tobacco industry claims that new tobacco products and e-cigarettes have significantly reduced health risks compared to traditional tobacco products and must therefore be treated accordingly. On the other hand, EU policy-makers insist that these products are still just as harmful, and all these years have adopted a cautious approach respecting the principle of achieving the highest possible level of health for all EU citizens. The next challenge will be for European and Member State public authorities to resist the pressure from the tobacco industry and its allies to achieve the lowest possible tax on these new products.©Tobacco Free Generation

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National Committee Against Smoking |