From July 1st, Germany began to tax e-liquids. Previously, only VAT was levied on the sale of e-cigarette products in Germany, but an additional tobacco tax will be levied after July 1.

In Germany, there are currently about 2.45 million e-cigarette users. Starting from July 1, e-liquid will be subject to an additional tobacco tax of 0.16 euros per milliliter, which may increase the retail price of the product by nearly 40%. For example, the current price of a bottle of e-liquid with a capacity of 10 ml is about 5 euros (including VAT), and the price will increase by 1.6 euros after the tobacco tax is added. After adding the VAT on top of the tobacco tax, the total price increase 1.9 euros.

Taxes will continue to rise in the coming years

It is expected that there will be three more similar price and tax measures before January 2026, and the levy will be doubled on the current basis - reaching 0.32 euros per milliliter, which is 3.2 euros for 10 milliliters. Regardless of the nicotine content, the price of a bottle of e-liquid will exceed 8 euros, which means that the price increase will be more than 60%, and the Ministry of Finance is expected to collect 14.5 billion euros in taxes from the price increase.

Scientific research clearly points out that e-cigarettes are more harmful than smoking

The most important argument against huge taxes on e-liquids is health. A series of independent studies have found that e-cigarettes are far less harmful than smoking. The Federal Institute for Risk Assessment noted that "consuming conventional cigarettes carries significantly higher health risks than consuming e-cigarettes."

Today, every child has known for years that cigarettes can be harmful, but many have no idea how much less vaping is. There are plenty of negative reports out there about e-cigarettes being harmful, causing lung disease and other health problems, but usually it refers to the consequences of American users who make their own e-liquids, or the consequences of improper use of the device, such as popcorn lung. According to a survey commissioned by the Federal Institute in 2020, only 5% of German smokers know that e-cigarettes are much less harmful than smoking.

Even the German Cancer Research Center says e-cigarettes are likely to be much less harmful to health than tobacco cigarettes. Health insurers such as Barmer say on their websites that "research shows that respiratory diseases such as chronic obstructive pulmonary disease, chronic bronchitis, emphysema and asthma are less frequent in e-cigarette users than in traditional cigarette users." There are no long-term studies evaluating the clear health effects of inhaling e-cigarettes.

Barmer also cites a study: “In a UK study of 886 participants, after switching from traditional cigarettes to e-cigarettes, 18% successfully quit smoking after one year. In the comparison group of nicotine patches, the quit rate was only 10%." No one should hide the fact that, of course, not smoking is still the healthiest option.

A constitutional complaint is currently being filed over the impact of the new tax, and the smoke-free coalition, the Association of Small and Medium Companies in the Vaping Industry (BFTG), is suing the new tax. , because traditional tobacco is harmful to health.

In addition, according to the scientific report, consuming electronic cigarettes is "much less risky than consuming tobacco." Stakeholders see this as a violation of the principle of tax justice: "The more harmful the consumption, the higher the tax on tobacco must be. But the new tax now violates this principle, so the law is also unconstitutional." It is unclear whether the Federal Constitutional Court will accept the Complaint, BFTG chairman Dustin Dahlmann expects a court response in the first half of 2023.

Especially given the huge advantages of e-cigarettes over traditional tobacco, it seems puzzling why a product that has been shown to be less harmful, and even help people quit smoking entirely, should now be taxed in the same way as traditional tobacco.

Raising taxes could bring new problems

Of course, all tax considerations are about the costs smokers incur to the health system due to increased disease and their treatment. According to a 2017 calculation by the German Cancer Aid, the costs associated with tobacco are equivalent to "80 billion euros per year for the country - the health system will generate 25.4 billion euros, and production losses and early retirements are estimated at 53.7 billion euros".

Will the new tax help reduce fiscal damage and make smokers less likely? I am afraid that this goal cannot be achieved through taxation. It is much cheaper to undercut traditional tobacco than e-cigarettes. Dahlmann even worries that a sharp increase in prices could force people to buy illegal products, spur black market growth, and even lead to new health problems from illegal products.

Consumers start stocking up ahead of price hikes

The new tax has little impact on traditional tobacco companies, and its harm is much less than that of e-liquid manufacturers, and traditional cigarettes may be cheaper than e-cigarettes in the future. Dahlmann said that could spell the end for many small and medium-sized businesses in the vaping industry. Before July 1, a large number of consumers have been seen starting to stock up in order to avoid the impact of price increases for as long as possible.

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