As seen from estimates made by Anafe-Confindustria, Italy’s national association of e-cigarette manufacturers, the Government’s new taxation proposal would increase the price of a small 10 ml e-liquid bottle from the current selling price of 6 euro to a mind-blowing 35 euro. That translates to $47 per 10 ml of standard quality e-juice. The Italian Ministry of Economy and Finance is currently working a new decree that will tax electronic cigarettes and drive up their costs, making them less financially attractive for users, and at the same time hitting hard on the prosperous ecig market.
There is however, a rather positive side of the tax proposals as non-combustible tobacco and other inhaled nicotine products will be taxed and considered differently with respect to regular analog cigarettes, due to their potentially reduced risk profile. This implies that current tobacco regulations will not apply to e-cigarettes and other herbal vaporizers. Ecig makers will thus be free to advertise their products, and consumers will be allowed to use them in public areas.
However, the result of this excessive taxation has been catastrophic. As soon as the Ministry of Finance announced its now memorable 58.5 percent tax increase on e-cigarettes, last year, businesses began to close, and the Italian market collapsed. With only to alternatives – go bankrupt or fight back – the country’s e-cigarette shops challenged the Government’s new tax in a court of law, that found it to be illegal and suspended it only few months ago. Nevertheless, the harm had already been done, with shops already beginning to close, sales stagnating and investors looking for more friendly markets to open-up shop.
Over the past two years with the growing popularity of electronic cigarette use in Italy – with almost 800,000 users – the Ministry of Finance has made countless attempts to bring the industry under some form of regulation, which would grant them to impose an excise duty on these types of products. But now, instead of advertising it as a tax increase, they are making it look like a shrinkage of their original proposal. What they did was reduce the excise duty of vaping products by 40 percent, but only after increasing the price of e-liquid to the equivalent of tobacco. According to the new taxation draft, a kilogram of tobacco would have a minimum price of 170 euro including excise duty and VAT.
Massimiliano Mancini, president of Anafe-Confindustria believes that Government is selecting to ignore the characteristics of the e-cigarette industry. This, he argues, will only hurt the market more, as it leads to even more dispute, instead of solving the problem. He and other vape business owners believe the Government only wants to destroy the independent ecig business sector and clear the path for the big tobacco corporations.