More taxes to come in 2017
The current year saw the introduction of excise taxes on vapor products in a handful of European countries as well as state and local jurisdictions in the USA. As the new year rapidly approaches we take a brief look at vapor products taxes that have been approved in 2016 for implementation in 2017.
New taxes in Europe
Effective on New Year’s Day Greece will apply a tax of EUR 0.10 per milliliter of liquid used in electronic cigarettes. On the same date a new tax of EUR 156.70 per kilogram of tobacco mixture used in an electronically heated tobacco product goes into effect. New categories for these vapor products were created through amendments to the Nation Customs Code.
Vapers in Hungary will see a new tax of HUF 55 per ml of e-liquid. A tax of HUF 10 per stick of heated tobacco product will be also introduced. A third category of novel tobacco product has been created for hybrid products in which liquid is used with tobacco. The rate for these products will be HUF 70 per ml.
In neighboring Slovakia, in contrast, a tax of EUR 73.90 per kilogram of tobacco mixture will fall on heat not burn products while e-cigarettes will remain untaxed for the moment. Croatia has added a Novel Tobacco Product category to its Excise Law. The levy on e-cigarettes will be zero while the tax on heated tobacco fixed at HRK 600 (EUR 79.30) per kg, the same rate set for smoking tobacco.
In Portugal, one of the first countries in Europe to tax e-cigarettes, the rate will be cut in half from EUR 0.60 to EUR 0.30 per ml.
Russia joins the tax club
The Russian Federation will modify its fiscal policy in 2017 to add new levies on electronic cigarettes and heated tobacco products as Russian consumers increase their use of vapor products. Russian policy follows the prevailing trend in Europe of applying specific taxes to the volume of liquid used in e-cigarettes and the weight of the heat not burn tobacco mixture. The rate of tax on e-liquid is set at RUB 10 (EUR 0.158) per ml of liquid while a tobacco mixture for electronic heating will be subject to a tax of RUB 4800 (EUR 75.91) per kilogram.
The Republic of South Korea, the first country to tax electronic cigarettes, will introduce a tax on heated tobacco of KRW 88 (EUR 0.07) per gram. The amendments to the Local Tax Act which created the new tax do not address the Green Fund tax or other earmarked taxes that currently apply to electronic cigarettes in South Korea. Analysts of Korean politics anticipate that additional earmarked taxes may be introduced on heated tobacco during the course of 2017.
The people have spoken
On election day in November 2016 voters in California approved a ballot initiative that introduces an excise tax on electronic cigarettes in 2017. The State will determine a rate equivalent to the new excise tax of $2.87 per pack of conventional tobacco cigarettes. Both the two dollar per pack increase in the state excise tax on cigarettes and the introduction of a tax on electronic cigarettes were included in the same ballot initiative, known as Proposition 56, which contained various new levies and rules for tobacco products sold in the state of California.
A similar referendum in the State of North Dakota failed to gather the necessary votes for adoption.