Thursday, 12 February 2015

Is it fair to consider taxing electronic cigarettes?

The subject of taxation and electronic cigarettes will certainly become a hot topic in the months and years ahead as governments around the world look to replace lost tobacco tax income. When the industry was relatively obscure and governments around the world were raising enormous amounts of money through tobacco tax there seemed to be no concerns. However, with electronic cigarettes now eating into tobacco use right across the world it seems that the authorities are now looking to tax electronic cigarettes.

There are obviously a number of factors to take into consideration when looking at the potential taxing of electronic cigarettes which we will cover below.


Health issues

The issue of potential long-term health problems from electronic cigarette use is something which has been discussed by some politicians as if it is proven. The fact is that the vast majority of medical help trials so far have flagged no major long-term health issues and indeed they have given additional support to the sector going forward. We will only really know for certain that there are no major health issues going forward as longer-term trials come to fruition, but so far the feedback has been very positive.

On that basis it would seem unfair to tax electronic cigarettes as a means of recouping additional health costs when at this moment in time it is unclear whether there is an additional cost to government/society.

Taxation

As we all know, there are very few products and services which we buy today which do not attract some form of additional taxation. Whether this is value-added tax or some other form of sales tax, it does seem as though governments around the world get more than their fair share from the consumer. So, is it fair to introduce a new tax on electronic cigarettes purely because many people seem to associate them and treat them the same as tobacco cigarettes?

While there is obviously an overlap between electronic cigarettes and tobacco cigarettes in the form of nicotine, this is where the similarity ends. The modern-day electronic cigarette consists of just a handful of ingredients while the modern-day tobacco cigarette is alleged to create in excess of 4000 potential toxins during smoking. So, on this basis it seems as though governments are looking to recoup future losses in tobacco tax revenue although whether it is fair to charge for electronic cigarettes is certainly a very hot topic. On the surface it seems to be unfair but when did this ever stop the politicians!

Conclusion


While there are many issues which need to be addressed in relation to long-term use of electronic cigarettes and vaping devices in general, the general opinion today is that they should be treated differently to their tobacco counterparts. However, governments and state authorities around the world seem to have very different ideas with a number of US states already looking to introduce their own specific electronic cigarette tax. Whether this is opportunism of the highest order or a valid and justified move, well, we will let you decide that……………

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