As e-cigarettes become more and more popular, it has naturally become a target for the government to need tax revenue. Because e-cigarettes are usually purchased by smokers and former smokers, the tax authorities correctly believe that the money spent on e-cigarettes is not the money spent on traditional tobacco products. For decades, governments have relied on cigarettes and other tobacco products as a source of income.
It is almost irrelevant whether electronic cigarette equipment and cigarette oil should be taxed like tobacco. The government saw that they were pushing smokers away from tobacco, and they understood that they had to make up for the lost income. Because e-cigarettes look like smoking, and there are a large number of public health people against e-cigarettes, it has become an attractive target for politicians, especially because they can justify the tax with all kinds of suspicious health statements.
In the United States and elsewhere, e-cigarette taxes are being proposed and passed regularly. The tax is usually opposed by tobacco harm reduction advocates, representatives of e-cigarette trade organizations and e-cigarette consumers, while tobacco control organizations and lung, heart and cancer associations support the tax.
Why does the government levy taxes on e-cigarettes?
There are many reasons for taxing a particular product, commonly known as a consumption tax: raising money for tax authorities, changing the behavior of the taxed, and offsetting the environmental, medical, and infrastructure costs of using the product. For example, taxes on alcohol to discourage excessive drinking, and taxes on gasoline to pay for road maintenance.
Tobacco products have long been the target of consumption tax. Because the harm of smoking costs the whole society (smokers' health care), tobacco tax supporters believe that tobacco consumers should pay for it. Sometimes excise taxes on alcohol or tobacco are also known as sin taxes, because they also punish the behavior of drinkers and smokers - which, in theory, helps persuade these criminals to give up their evil behavior.
However, due to the government's dependence on taxes, the decline of smoking rate has caused a financial gap, which must be made up by other sources of income, otherwise the government must reduce its expenditure. Tobacco tax is an important source of income for most governments, and consumption tax is levied in addition to the standard sales tax on most consumer goods.
How does electronic cigarette tax work?
Most U.S. consumers pay state (and sometimes local) taxes on their e-cigarette products, so the government has benefited from e-cigarette sales before the consumption tax is added. Sales tax is usually levied as a percentage of the retail price of the product purchased. In many other countries, consumers pay "value added tax" (VAT), which works in the same way as sales tax. As for consumption tax, there are several basic categories.
One of the most common forms of electronic cigarette tax is in the retail sector. Some taxes cover all e-cigarette products (such as the 20% tax in New York State), while others are only for cigarette oil. The tax is usually only levied on the sale of nicotine containing oil.
Wholesale taxes are ostensibly collected from wholesalers (usually distributors) who sell their products to businesses that resell them at retail outlets in the state. Tax is usually a percentage of the wholesale price (cost). It may be used in all e-cigarette products, or only in products containing nicotine. Although the wholesale tax is not charged to the end-user of the product, the cost of the tax is usually included in the retail price of the product.
Electronic cigarette tax in the United States
There is no federal tax on e-cigarettes in the United States. Congress has proposed a bill to tax e-cigarettes, but so far none of it has the support it needs to pass.
E-cigarettes are taxed by States, regions and municipalities in the United States
By 2019, nine states and the District of Columbia will tax e-cigarette products. That figure more than doubled in the first seven months of 2019. For more than a year, the moral panic about Juul and teenagers' e-cigarettes has made headlines almost every day, prompting legislators to take action to "stop the epidemic".
As of the beginning of 2021, 29 states, some cities and counties, the District of Columbia and Puerto Rico have imposed taxes on e-cigarette products.
Although Alaska does not have a state tax, some municipalities have their own e-cigarette tax:
·Juno, North West Arctic and Petersburg have the same 45% wholesale tax on nicotine containing products
·The municipality of anchorage has passed a 55% wholesale tax, which will come into effect on January 1, 2021
·The autonomous town of Matanuska Susitna has a 55% wholesale tax
California's tax on "other tobacco products" is set annually by the state equality Commission. It reflects the percentage of all taxes levied on cigarettes. Initially, this was 27% of the wholesale cost, but after proposal 56 increased the cigarette tax from $0.87 to $2.87 per pack, the e-cigarette tax increased sharply. For the year beginning July 1, 2020, the tax on all nicotine containing products is 56.93% of the wholesale cost
In 2020, voters in Colorado approved an escalating tax on nicotine containing e-cigarette products, including bottled tobacco oil, reflecting Colorado's tax on non cigarette tobacco products. The tax will come into effect on January 1, 2021 at the rate of 30% (manufacturer's list price) and will increase to 35% in 2022, 50% in 2023, 56% in 2024 and eventually 62% in 2027. For products identified as "modification risk" by FDA, the tax rate will be reduced by 50%
The state levies a two-tier tax of $0.40 per milliliter on the oil of cigarettes (pods, cartridges, cigalikes) and 10% on the wholesale of open system products (including bottled e-cigarette liquid and e-cigarette equipment)
A tax of US $0.05 per milliliter is levied on nicotine containing cigarette oil
District of Columbia
The U.S. Capitol classifies e-cigarettes as "other tobacco products" and taxes the wholesale price according to the tax rate linked to the wholesale price of cigarettes. For equipment and nicotine containing e-cigarettes, the tax is currently set at 96% of wholesale costs
A tax of US $0.05 per milliliter is levied on the cigarette oil in the closed system products (pods, cartridges, cigalikes), and a wholesale tax of 7% is levied on the open system equipment and bottled cigarette oil
A 15% wholesale tax will be imposed on all e-cigarette products. In addition to the statewide tax, Cook County and the city of Chicago (located in Cook County) have their own e-cigarette tax:
·Chicago charges a tax of $1.50 per unit on any nicotine containing e-cigarette product (bottled cigarette oil or pre installed equipment) and a separate tax of $1.20 per milliliter on the cigarette oil itself（ Chicago e-cigarette users also have to pay a Cook County tax of $0.20 per milliliter.) Because of the high tax, some e-cigarette stores in Chicago sell zero nicotine and DIY nicotine to avoid the high tax per milliliter of large bottles of cigarette oil
·Cook County taxes products containing nicotine at a rate of $0.20 per milliliter
Indiana included a two-tier electronic cigarette tax in its 2021 budget bill. The new tax will be 25% of the wholesale cost of closed system products such as pre installed smoke bombs, and 15% of the retail cost of open system products (sales tax), such as bottled products. The tax will come into effect on July 1, 2022.
A tax of $0.05 per milliliter is levied on all cigarette oils, whether or not they contain nicotine
A 15% wholesale tax on bottled oils and open system equipment, and a $1.50 per unit tax on pre loaded cartridges and boxes
A $0.05 per milliliter tax on nicotine containing electronic cigarette oil
43% wholesale tax on all e-cigarette products
A 6% sales tax will be imposed on all open e-cigarette products (including cigarette oil), and a 60% sales tax will be imposed on cigarette oil in containers (pods, cartridges, disposables) with a capacity of less than 5 ml. In addition to state taxes:
·Montgomery County levies a 30% wholesale tax on all e-cigarette products, including equipment without cigarette oil
75% wholesale tax on all e-cigarette products. Consumers are required by law to provide evidence that their e-cigarette products have been taxed, otherwise they will be detained and fined $5000 for the first offence and $25000 for the second
In 2011, Minnesota became the first state to tax e-cigarettes. The tax was initially 70% of the wholesale cost, but it increased to 95% of the wholesale cost in 2013. These finished products contain nicotine (disposable e-cigarettes, cartridge e-cigarettes, bottled cigarette oil) and are imported from other states. However, for bottled tobacco oil produced in Minnesota, only nicotine itself is taxed
The state does not tax e-cigarette products, but one city does:
·Since 2019, Omaha has included e-cigarette products in the city's 3% tobacco tax
30% wholesale tax on all e-cigarette products
8% wholesale tax on open system e-cigarettes and US $0.30 per milliliter wholesale tax on closed system products (pods, cartridges, cigalikes)
New Jersey imposes a $0.10 per milliliter duty on cartridge and cartridge based products, 10% of the retail price of bottled and 30% of the wholesale price. New Jersey lawmakers voted in January 2020 to double the two-tier e-cigarette tax, but the new bill was vetoed by governor Phil Murphy
New Mexico has two levels of electronic cigarette oil tax: 12.5% for bottled cigarette oil wholesale, and $0.50 for each cigarette cartridge with a capacity of less than 5ml
New York State
20% retail tax on all e-cigarette products
A tax of US $0.05 per milliliter is levied on nicotine containing cigarette oil
A tax of US $0.10 per milliliter is levied on nicotine containing cigarette oil
A 65% wholesale tax is imposed on all nicotine "inhalation delivery systems," including hardware and "components" (including tar). The tax also includes heated non combustible tobacco products (HNB), such as iqos, but exempts all e-cigarette products sold in licensed marijuana pharmacies
Pennsylvania's 40% wholesale tax was initially imposed on all e-cigarette products, but the court ruled in 2018 that the tax could only apply to cigarette oil and equipment containing cigarette oil. The Pennsylvania steam tax closed more than 100 small businesses in the first year of approval
The duty of cigarette oil is 0.05 US dollars per milliliter, and the duty of electronic cigarette is 3.00 US dollars per unit
56% wholesale tax on oil and pre filled equipment
A 92% wholesale tax on oil and equipment - the highest tax of all States
A tax of US $0.066 per milliliter is levied on nicotine containing cigarette oil
The state passed a two-tier retail oil tax in 2019. It charges buyers $0.27 per milliliter of cigarette oil (with or without nicotine) in cartridges and cartridges less than 5ml; Charge us $0.09 per milliliter of smoke oil in a container larger than 5ml
A tax of $0.075 per milliliter is levied on all cigarette oils, whether or not they contain nicotine
Only 0.05 U.S. dollars per milliliter of smoke oil in pods, cartridges, cigalikes is taxed, regardless of whether it contains nicotine or not
15% wholesale tax on all steam products
Electronic cigarette tax around the world
Like the United States, legislators around the world do not know about e-cigarette products. In the eyes of legislators, these new products seem to pose a threat to cigarette taxes (as it is), so their impulse is often to levy high taxes and hope for the best.
International electronic cigarette tax
There is a tax of 10 leks (US $0.091) per milliliter on nicotine containing cigarette oil
20 manat (US $11.60) per litre (about US $0.01 per milliliter) for all oil
For nicotine containing oil, the tax is 100% of the pre tax price. This is equivalent to 50% of the retail price. The purpose of the tax is unclear and the country is said to ban the use of e-cigarettes
Although Croatia has an e-cigarette tax on its books, the current tax rate is zero
A tax of 0.12 euro (US $0.14) per milliliter will be levied on all e-cigarettes
The Danish Parliament has approved a tax of DKR 2.00 (US $0.30) per milliliter, which will come into effect in 2022. Advocates of e-cigarettes and harm reduction are trying to overturn the legislation
In 2018, Estonia imposed a consumption tax of 0.20 euro (US $0.24) per milliliter on all cigarette oil. In December 2020, riigikogu (parliament) suspended taxes - effective April 1, 2021, and continuing until December 31, 2022 - in order to end the large black market (and flavor bans) that has grown as a result of excessive taxes. According to nnasmoke free Estonia, a consumer nicotine group, "self mixed, cross-border and smuggled oils account for 62-80% of the total Estonian market."
A tax of 0.30 euro (US $0.34) per milliliter will be levied on all tobacco oil
A tax of 0.10 euro (0.11 US dollars) per milliliter will be levied on all tobacco oil
A tax of 20 forints per milliliter (US $0.07) will be levied on all tobacco oil
The tax in Indonesia is 57% of the retail price. It seems to apply only to nicotine containing tobacco oil (the extract and essence of tobacco) is the wording. Officials seem to prefer that citizens continue to smoke
After years of taxing consumers to make e-cigarettes cost twice as much as smoking, Italy's parliament approved a new, lower e-cigarette duty rate at the end of 2018. The new tax is 80-90% lower than the original tax. At present, the tax on nicotine containing tobacco oil is 0.08 euro (US $0.09) per milliliter, and the tax on nicotine free products is 0.04 euro (US $0.05). For Italian e-cigarette users who choose to make their own cigarette oil, PG, VG and flavoring are not taxed
The duty rate for equipment and nicotine containing oil is 200% of the CIF (cost, insurance and freight) value
Although Kazakhstan has an e-cigarette tax on its books, the current tax rate is zero
Kenya tax was implemented in 2015, with equipment tax of KSHS 3000 (US $27.33) and replacement of KSHS 2000 (US $18.22). Taxes make e-cigarettes much more expensive than smoking (at $0.50 per pack) - and probably the highest in the world
One kyrgyzsom (US $0.014) per milliliter is charged for nicotine containing cigarette oil
The unusual Latvian tax uses two bases to calculate the excise tax on tobacco oil: Euro 0.01 per milliliter (US $0.01) and an additional tax on the weight of nicotine used (Euro 0.005 per milligram)
0.12 euro (US $0.14) per milliliter duty on all oils
There is a 10% tax on e-cigarette equipment and a 40 cents per milliliter (US $0.10) tax on cigarette oil. However, products containing nicotine can only be obtained legally through prescription
A tax of 0.90 euro (US $1.02) per milliliter will be levied on all tobacco oil
The duty is 0.2 Macedonian Dinar (US $0.0036) per milliliter. The law includes provisions that allow automatic tax increases on July 1 of each year from 2020 to 2023
The law classifies e-cigarettes as tobacco products and imposes a 16% tax (possibly based on wholesale prices). However, most sellers will not register their products as tobacco, but import them in other ways
A tax of 10 Philippine pesos (US $0.20) is levied on every 10 ml (or part of 10 ml) of nicotine containing tobacco oil (including pre filled products). In other words, any volume greater than 10 ml but less than 20 ml (e.g., 11 ml or 19 ml) is charged at the rate of 20 ml, and so on
A tax of 0.50 Polish zloty (US $0.13) per milliliter will be levied on all tobacco oil
A tax of 0.30 euro (US $0.34) per milliliter is levied on nicotine containing cigarette oil
A duty of 0.52 Romanian Lei (US $0.12) per milliliter is levied on nicotine containing cigarette oil. There is a way to adjust taxes every year based on the growth of consumer prices
Disposable products such as cigalikes are taxed at 50 rubles (US $0.81) per unit. Nicotine containing tobacco oil is taxed at the rate of 13 rubles and US $0.21 per milliliter
The duty on oil and equipment is 100% of the pre tax price. That's 50% of the retail price
4.32 S.D. (US $0.044) per milliliter duty on all oils
There is a tax of 0.18 euro (0.20 US dollars) per milliliter on nicotine containing cigarette oil
the republic of korea
The first country to levy a national e-cigarette tax was the Republic of Korea (South Korea, commonly known in the West as South Korea) - in 2011, Minnesota began taxing tobacco oil in the same year. Currently, the country has four separate taxes on tobacco and oil, each of which is designated for a specific purpose of expenditure (the national health promotion fund is one of them)（ This is similar to the United States, where the federal cigarette tax was originally used to pay for child health insurance programs. South Korea's various cigarette oil taxes add up to 1799 won (US $1.60) per milliliter, and the waste tax on disposable and replacement cigarette bombs is 24.2 won (US $0.02) per 20 cigarette bombs
A tax of 2 kronor (US $0.22) per milliliter is levied on nicotine containing cigarette oil
Tax up to 45% (believed to be based on wholesale price)
United Arab Emirates (UAE)
The tax on oil and equipment is 100% of the pre tax price. That's 50% of the retail price