After Making E-Liquids More Expensive Than Cigarettes, Italy Prepares to Tax E-Liquid Ingredients As Well
I’ve long referred to Italy as an example of how excessive taxation can destroy the vaping industry, but even I could never have imagined how far the European state could go to achieve its sinister goal. After adopting new tax laws that make e-liquid refills more expensive that packs of tobacco cigarettes, Italy will soon start to tax “inhalable liquids” as well, to make sure that vapers don’t bypass the tax by mixing their own juices.
As of January 1st, all e-liquids, whether they contain nicotine or not, are taxed an extra 0.37 euros per milliliter, which means that after VAT, a 10 ml bottle of the cheapest e-liquid you can buy in Italy now costs 4.5 – 5 euros ($5.4 – $6) more than it did before. To really put things into perspective, a pack of Marlboro cigarettes costs 5.20 euros, while most 10-ml e-liquid bottles are double that price. It’s pure insanity, but Italian lawmakers don’t seem to care.
“The State has decided that you must continue to smoke tobacco,” Gianluca Giorgetti, co-owner of the largest vaping business in Italy, recently told Il Fatto Quotidiano. “By deciding to also tax water and flavorings, the price of e-liquid for consumers goes well past that of a pack of cigarettes. So while abroad vaping is recognized and incentivized as a means of reducing damage done by smoking, in Italy it is merely seen as a way of refreshing the coffers of the state.”
And it’s certainly not the only measure stated in the amendment adopted late last year by the Senate’s Budget Committee. Online sales of e-liquids have also been banned, as have imports from foreign countries, on grounds of protecting consumers from inferior products.
The controversial amendment also makes e-cigarettes and vaping-related products a State Monopoly, so they can only be sold by tobacconists and specialized shops. In the original version of the document, tobacconists were the only ones allowed to commercialize vaping products, but lawmakers later reconsidered, allowing specialized vape shops to also continue doing business, but only if they get an authorization from the Monopoly.
To make matters worse, several Italian newspapers report that e-liquid producers will have to pay taxes retroactively, for the e-liquid they sold before the new tax came into effect. No one knows exactly how the Italian state plans to implement this, but we are talking about hundreds of millions of euros in taxes that e-liquid companies will likely have to pay for past sales.
But if you think that’s crazy, you’re going to love this next part. In mid-April, Italy plans to apply some insane taxes on “inhalable liquids” commonly used in producing e-liquids. That applies to propylene glycol and vegetable glyerine, the two most common bases of vape juice. Right now one liter of propylene glycol can be bought for around 20 euros, but once the new taxes are applied, the price is expected to skyrocket to 450 euros. That 430 euro difference is basically just tax. Ironically, nicotine is not subject to these upcoming taxes, as it is not categorized as a “liquid intended for inhalation”.
The problem is that “inhalable liquids” like propylene glycol and vegetable glycerine are widely used in the production of pharmaceuticals, herbal medicines, foods and cosmetics. The State claims that such products will not be subject to this type of taxation, but it’s not yet clear how authorities plan to differentiate between products containing such ingredients.
The Corriere Della Sera newspaper reports that Italian vapers are racing to stock up on any cheap e-liquids and ingredients they can find, but with stocks having evaporated by mid-December of 2017, after the amendment was adopted, and foreign imports now banned, doing so is a nearly impossible task.
So why is Italy cracking down on vaping so hard? Well, believe it or not they actually made it very clear that the main reason for the new taxes is to recover the loss of tax revenue on tobacco cigarettes that smokers-turned-vapers have stopped buying. Or, as the country’s Constitutional Court – which declared the taxing legitimate last year – put it, “the recovery of revenue eroded by the electronic cigarette market”.
The over 2,000 companies involved in the vaping market, and their 30,000-plus employees, all of whom were already paying taxes, will suffer dire economic consequences as a result of the new taxes, but the Italian State is too concerned with filling its budget holes to care. The problem is that their over-taxation hasn’t worked very well so far.
Bottom line, if any other country wants to utterly destroy its e-cigarette business sector, all they have to do is follow Italy’s example. With just a few strokes of a pen, lawmakers managed to turn a booming market into one that’s struggling to survive. Italy is currently ranked number one in Europe for production of e-liquid and bases, but come April, most companies will probably go out of business.
