Finance officials say it would be 'too difficult' to put a tax on e-cigarettes
The products are unlikely to face any new taxes in the Budget, based on the advice.
IN A BOOST to the vaping industry, finance officials have played down the likelihood of introducing a new tax on e-cigarettes on the grounds that it would be too difficult to enforce.
Earlier this year there were reports that the European Commission was considering introducing a tax on electronic cigarettes on top of VAT.
At the moment VAT is paid on e-cigarettes, however they are not subject to excise duty – which is paid on regular cigarettes – and it seems that there are no plans in the near future to introduce any new tax on the products in Ireland.
According to pre-budget tax documents published by the Department of Finance yesterday, the collection of any new tax on e-cigarettes would be difficult due to how the products are classified.
The ‘general excise paper’ drawn up by the department’s tax strategy group found that a 50c charge levied on every 10ml of liquid used in e-cigarettes would yield €8.3 million annually.
Problems collecting tax
However, it added: “As e-cigarettes are not harmonised excisable products the Revenue Commissioners would be unable to use movement controls and tax warehousing for tax-collection purposes.
“The tax would have to be applied on a self-assessment basis to suppliers in the same way as solid fuel carbon tax. Consumers, retailers and suppliers would be free to buy the product from other EU member states with no import formalities.”
It said that implementation and collection of such a tax “would be difficult given the wide variety of ways in which these products are supplied to the consumer”.
The report also noted that many sources consider e-cigarettes “to be a cessation tool and certainly less harmful than cigarettes”.
Quitting tool
The fact that e-cigarettes don’t contain tobacco or harmful substances like tar that are associated with regular cigarette smoking has long been one of the arguments put forward as to why they should not be taxed as heavily as normal cigarettes.
The products have been endorsed by Public Health England (PHE), an agency of Britain’s Department of Health. It claimed last year that e-cigarettes could be up to 20 times safer than traditional tobacco cigarettes. Some studies have also suggested that they can help people to give up smoking.
However, the vapour is generally infused with nicotine and many bodies, such as the World Health Organisation, have discouraged their use and recommended that smokers looking to quit should stick to alternative nicotine replacements such as patches, lozenges and gum.
Vape Business Ireland director Michael Kenneally welcomed the tax group’s observations, saying that vaping offers an alternative to thousands of Irish users.
“We are pleased to see the (tax group) has acknowledged that these products are not tobacco products and should not be subject to excise in Budget 2017,” he said.
The move is a positive one for the industry after a European directive introduced earlier this year effectively banned the advertising of e-cigarettes.
