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UK consumers to be hit by excise tax on heated tobacco

'UK to introduce excise duty on heated tobacco' read the headline.

The decision, reported by Politico Europe yesterday, is in response to a consultation on the tax treatment of heated tobacco products.

I expected more interest from the media but apart from Politico the only publications that have mentioned it are two retail titles, The Grocer and Convenience Store.

Both reports featured quotes from a Forest press release that criticised the Government’s decision:

"Heated tobacco may not be as safe as electronic cigarettes but current evidence suggests there is almost certain to be a reduction in risk for cigarette smokers.

"Why would any government want to undermine the future of a product that may encourage smokers to quit voluntary and without coercion?

"Many smokers have tried e-cigarettes but don't like them. The attraction of heated tobacco is that it fills the gap between combustible cigarettes and e-cigarettes which don't contain tobacco.

"Heated tobacco products are still in their infancy. Adding excise duty will almost certainly deter many smokers from switching to a potentially safer device.

PMI, which makes the iQOS 'heat not burn' device that was launched in the UK in 2016, welcomed the ‘recognition’ that heated tobacco was "fundamentally different" from combustible tobacco but was broadly supportive of the imposition of an excise tax on ‘heat not burn’ products.

Instead, the company simply reiterated its belief that "taxation should be proportionate to harm and heated tobacco should therefore be taxed at a lower rate."

That's not an unreasonable position to take. However excise duty on heated tobacco is unlikely to remain "at a lower rate" indefinitely. Regardless of the risk, that's not how governments or the tobacco control industry works.

Ultimately the consumer always pays so it will be interesting to see what impact the imposition of excise duty has on the heated tobacco market.

Meanwhile it's worth noting that, only eight weeks ago, the European Commission decided, 'due to lack of sufficient information', that no excise tax should be imposed on either e-cigarettes or novel tobacco products including 'heat-not-burn' tobacco.

See 'Commission opposes excise tax on e-cigarettes and novel tobacco products, for now'.

In other words, by introducing its own excise duty category, the UK Government has done what it did when it fast forwarded the introduction of plain packaging.

It has 'gold-plated' an existing EC directive (in this case the Tobacco Excise Directive) and gone further than it needed to.

Some might say this is because the UK is one of the few EU member states where iQOS is sold, but the message is clear - post Brexit we may have to lower our expectations about a reduction in unnecessary and counter-productive regulations.

PS. In its report on the consultation on the tax treatment of heated tobacco products the Government includes a list of stakeholders consulted.

It won’t surprise you to learn that the list includes not a single body representing the consumer.

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Reader Comments (1)

Once again the prohibitionists are using tax policy to persecute smokers. This policy decision will ensure that antismoker pressure groups continue to secure preferential funding and will benefit criminal enterprises and smugglers ensuring continued profit for gangsters.

Wednesday, March 14, 2018 at 19:55 | Unregistered CommenterVinny Gracchus

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