REVIEW OF DIRECTIVE 2011/64 / EU ON THE STRUCTURE AND RATES OF EXCISE
APPLIED TO THE TOBACCO MANUFACTURED PRODUCTS.
1. DISCIPLINE OF NEW PRODUCTS (ELECTRONIC CIGARETTES AND NEW GENERATION
PRODUCTS)
We believe that, to avoid elusive phenomena in EU internal market, liquid smokeless products for inhalation (electronic cigarettes) should be included among those subject to excise duty with a taxation that would not create the conditions that imply a marked shift consumption towards “do-it-yourself” nicotine delivery systems which are potentially dangerous for health, as there would be no one checking if the maximum quantity of nicotine fixed by art. 20 of Directive 2014/40/EU were respected.
Heat-not-Burn products are not directly linked to the explanatory definitions present in the 2011/64/EU Directive but they are qualified as ‘novel tobacco products’ in the 2014/40/EU Directive. In light of this, we have expressed our full disagreement regarding the current taxation rules on ‘Heat-not-burn novel products’ in the Final Remarks of this Consultation, as there is not an existing European set of rules on the taxation of the above-mentioned products. Nevertheless, we find necessary to add the ‘Heat-not-burn novel products’ to the Excise Directive.
For this reason, we believe we need to extend to the European level the Italian legislative experience, which called them "smokeless tobacco products that can be consumed without burning". Accordingly they obviously can be included among tobacco manufactured products and, therefore, eligible to an excise tax. In view of the possible less harmful effects of these products than those of traditional tobacco, the Italian legislature has established a more favorable taxation. In our view, that choice should also be made within the EU, so as not to discourage the research for reduced risk products, more and more innovative.
In this regard, it is certainly necessary that, because of their characteristics, primary and secondary distribution of ‘Heat-not-burn novel products’, electronic cigarettes and refills containers is carried out through controlled channels and if compatible with systems already established by any Member State with reference to tobacco, by means of points of sale and deposits subject to supervision and control by the State.
2. BORDER LINE PRODUCTS AND TAX AND CUSTOMS CLASSIFICATION
The hypothesis to align the minimum excise duties for borderline products such as cigarillos with the levels of cigarettes in order to avoid consumer substitution effects seems not supported by conclusive evidence with regard to the tobacco market trend. It should also be considered, that a significant increase in minimum excise on these niche products would have the effect of determining their disappearance, as these are products whose processing still has a strong artisan component and the concerned companies could not bear costs comparable to those of the industries. We suggest to avoid the adoption of measures that may in some way be a serious implementation of costs and charges, in line with what was expressly agreed in paragraph 14 of the EU Council conclusions on the structure and rates of excise duties on manufactured tobacco of March 2016.
Likewise, we believe that the Directive 2011/64 / EU will maintain an appropriate level of taxation for rolling tobacco, which now does not need any further review in consideration of a market trend with substantially stable values.
On a possible review of the tax and customs classification, we need an in-depth impact assessment on the administrative and economic consequences of each decision. Assuming a regulatory intervention about it, we prefer the definition of a correlation table in the two classifications, which makes them more consistent.
3 TAX CLASSIFICATION OF RAW TOBACCO
We are opposed to any hypothesis to incorporate raw tobacco in a fiscal classification, as we believe that the application of a system of excise duties for that product would result in a radical deconstruction of tobacco industry and consequently the entire sector, without any benefit in terms of contrast to the elusive phenomena that, on the contrary, could increase because of a much more marked difference in price between EU-produced tobacco and illicit origin tobacco, mainly produced in non-EU areas without the disciplinary production rules and public health control and quality standards set by the European laws.
We are however of the opinion that it is necessary to identify procedures of traceability of the products shared by the Member States involving the least possible burdens to farms and to the State.
4. MINIMUM EXCISE
We believe the current tax system present mechanisms such that its review is not necessary. If the European legislature had a different view, we support solutions to relate the minimum excise duty at the weighted average price, which guarantee the maintenance of a level of prices not overly bearish, both to protect the central government revenue and the public health protection.