Monday

16th Jul 2018

E-cigarette tax sets scene for EU lobbying war

  • Global e-cigarette market forecast to grow to €46 billion by 2025 or 2030 (Photo: Vaping360)

EU countries are preparing to tax e-cigarettes under the same regime as normal cigarettes, in a move likely to increase prices and to prompt a fight by lobbyists in Brussels.

Last Friday (26 February), member states’ ambassadors agreed to take the first step by asking the European Commission to draft an “appropriate legislative proposal” in 2017.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

  • UK treasury, for one, pockets €15.5 billion a year from tobacco excise tax (Photo: Daniel de André)

The project is to be endorsed without further discussion when the bloc’s finance ministers meet on 8 March.

The ministers’ draft conclusions said that e-cigarettes, as well as other “novel” products, could cause “inconsistencies and legal uncertainty” in the single market if they stayed exempt from excise tax.

They also said excise duties or some “other specifically designed tax” on novel tobacco items, which use steam instead of smoke to put nicotine into people’s lungs, could help meet “public health objectives”.

They added that work on the new tax regime should be “intensified” if “the market share of such products show a tendency to increase”.

Prices 'will rise'

Global e-cigarette sales were about €7.5 billion last year. But analysts forecast they will grow to €46 billion by 2025 or 2030.

Under existing rules, all EU countries must impose an excise tax of at least 57 percent on tobacco products, but most impose only VAT on e-cigarettes at a level of about 20 percent.

In the UK the excise and VAT burden sees the state collect £6.17 every time someone pays the recommended retail price of £7.98 for a pack of 20 premium-brand cigarettes.

The excise income alone is worth €15.5 billion a year.

One EU official said on Monday (29 February) it was “self-evident” that the price of e-cigarettes would go up if the commission went ahead. A second official said it was “too early to say what effect the review” of excise rules might have on prices.

The ministers' draft conclusions noted that the commission was not obliged to go ahead. But the draft text said EU states would want “reasons” if it did not act.

With several EU capitals still struggling to balance the books, the commission in a report in December also said e-cigarette taxes could have “significant long term budgetary implications” for national treasuries.

Lobbying war

One of the EU officials said the next steps would be “to undertake studies, carry out impact assessments, [and] a public consultation”, setting the stage for a new lobbying war in Brussels.

The last time the EU regulated e-cigarettes, in 2014, big tobacco firms led by Philip Morris International (PMI) tried to dilute the new restrictions on grounds that e-cigarettes help people to quit smoking.

They did it because they were buying up e-cigarette makers to protect their profits.

E-cigarette firms joined them in what Olivier Hoedeman, from Corporate Europe Observatory (CEO), a Brussels-based pro-transparency NGO, called an “angry” campaign with “very strong emotions”.

One MEP at the time got an email saying she would be “finished” if she obstructed e-cigarettes.

EUobserver received emails saying it would be responsible for smokers’ deaths if it published stories giving credence to claims that e-cigarettes are bad for your health.

On the other side, pharmaceutical giants such as GlaxoSmithKline lobbied for tougher EU rules on the grounds that e-cigarettes encouraged young people to start smoking.

They did it because they make nicotine gums and patches, which compete with e-cigarettes for people trying to give up. But gums and patches are regulated under more exacting EU medical product standards.

They were joined by companies such as Trierenberg-Gruppe, the world’s top producer of cigarette papers.

More research needed

Public health advocates such as Cancer Research UK and the European Heart Network are concerned that the corporate lobbyists are ignoring science.

Most health NGOs do not have a position on e-cigarettes because they are too new for conclusive research on long-term benefits and risks.

The European Network for Smoking and Tobacco Prevention, a Brussels-based group, is calling for tougher EU rules.

But its spokesman, Dominick Nguyen, told EUobserver: “This is not about being for or against e-cigarettes, but [about] encouraging research and provision of evidence on e-cigarettes in order to make the right informed decisions.”

Commenting on the “public health” aspect of the excise tax project, CEO’s Hoedeman said: “It would be quite awkward to put e-cigarettes in the same category [as normal cigarettes] if the science isn’t there yet”.

PMI was not available for comment on Monday. GlaxoSmithKline declined to comment.

According to their public declarations, PMI spent up to €1.5 million lobbying EU officials in 2014. GlaxoSmithKline spent up to €2 million.

MEPs split on tobacco deal with PMI

With less than five months until a deal with tobacco company PMI expires, MEPs and commissioner Georgieva discussed how to fight illegal cigarette trade after its expiration date.

MEP defends confidentiality of tobacco meeting

Discussion on the value of EU deals with top tobacco firms had to be held behind closed doors, said the German MEP who organised it: “Some people didn't want to be quoted”.

Opinion

Are MEPs too 'free' to be accountable?

The European Parliament is currently fine-tuning its negotiating position on the Commission's proposal from September 2016 for a mandatory transparency register. Sadly, so far it seems to prefer empty statements to bold action.

MEPs delay debate about 'killer robots'

"International regulation has to be agreed before the development gets completely out of hand," says one MEP as the European Parliament is due to vote on an EU defence fund that could see taxpayer-funded development of the controversial weapons systems.

Investigation

US in denial on EU climate forum

An Obama-era climate change working group has been in limbo since Trump came into office. Other areas of transatlantic energy cooperation also face uncertainty.

News in Brief

  1. VW owners to get diesel software update free until 2020
  2. Airbnb breaches EU consumer rules, Commission says
  3. EU sees no China free-trade talks
  4. Italy accepts migrant boat after help promises
  5. EU opens case on Siemens' Alstom buyout
  6. Trump: May found my Brexit advice 'too brutal'
  7. Italy will reject EU-Canada trade deal, says deputy PM
  8. Commission: Juncker suffered from sciatica attack at Nato

Stakeholders' Highlights

  1. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Latest News

  1. EU and China agree on words, not yet on action
  2. EU is 'foe', as Trump seeks to make friends with Putin
  3. Let's not be 'naive' with Chinese partner, says senior MEP
  4. Trump, trade, and Brexit in EU headlines This WEEK
  5. EU and China edge closer in Trump's 'America First' world
  6. How the World Cup exposed Russian chauvinism
  7. Stage set for Trump-Putin finale
  8. Trump scuppers trade deal with UK under May's Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  2. FIFAGreen Stadiums at the 2018 Fifa World Cup
  3. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  4. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  5. FIFARecycling at the FIFA World Cup in Russia
  6. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  7. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  8. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  9. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  10. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  11. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  12. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments

Join EUobserver

Support quality EU news

Join us