EU agrees to tax e-cigarettes at higher rate
E-cigarettes are poised to be taxed at a higher rate across Europe, with France and two other nations calling for a minimum excise duty to be set at “the highest common denominator”.
EU diplomats unanimously agreed a call for the European commission to prepare a legislative proposal by 2017, in a draft document seen by the Guardian that EU finance ministers will sign off at a meeting next Tuesday.
No proposal will be tabled until after an exhaustive process of impact studies, technical analyses and public consultations. But if these hurdles can be cleared, officials say that taxing Europe’s growing vape industry could be desirable.
“There is an argument that it would be quite good to do something like minimum levels of excise duty for e-cigarettes. Member states could then decide whether to raise them higher or not,” one official said. “At present they don’t fall under excise duties like cigarettes, so maybe we would set a minimum threshold.”
At least 57% of the price of a pack of cigarettes must come from excise duty under the UK’s customs rules. Another 20% of the price comes from VAT, which Brussels has no powers to regulate.
Last December, the commission warned that failure to harmonise excise duties for e-cigarettes could have “significant long term budgetary implications” for countries, leading to national taxes being levied that over time could threaten the internal market.
But any moves from Brussels to increase the price of a product that can help people quit smoking could be incendiary in the UK, ahead of the July referendum.
After British press reports suggesting that a proposal was inevitable – and likely to tax e-cigarettes the same as tobacco – the Ukip leader Nigel Farrage tweeted: “Appalled that EU set to tax e-cigarettes at same levels as tobacco. All vapers must vote to Leave EU!”