New nicotine tax on e-juice could triple its price

Nicotine cones above 15 mg/ml will cost three times as much from next year. With a nicotine tax of €4,000 per litre, the government hopes to raise more revenue. And better public health.
"More smokers will stay in their tobacco use. This is not public health. It's criminal," says Christian Brandt, who runs Light Your Fire (LYF).

The Ministry of Finance wants to shock the price of so-called high-concentration nicotine liquids. The ministry proposes an excise tax of SEK 4000 per litre. This means that the price of a nicotine shot, with 15 mg/ml or more, will increase by almost 70 per cent. If the proposal is adopted, the tax will apply from 2021.

One of the reasons for the proposal is a miscalculation of the market before the previous taxation of nicotine e-liquids in 2018. The idea was then to introduce a excise duty on all nicotine-containing e-liquid. The tax was calculated per litre and was the same regardless of nicotine strength: €2,000 per litre.

Adapting e-juice to nicotine tax

However, at the same time as the tax was introduced, Swedish companies adapted their product ranges to the newly introduced EU directives (TPD). Under the new laws, companies were not allowed to sell nicotine-containing e-liquid in bottles larger than 10 ml and charges for nicotine-flavoured e-juice were made mandatory. But instead of paying duties and taxes, most companies in the industry adopted a new system for selling e-juice: nicotine-free and flavoured shortfills (unregulated) with space for nicotine shots.
Sales of taxed nicotine liquids have therefore decreased significantly since 2018.

No tax on nicotine caps

The next setback for taxation came in 2019. It became clear that the tax authorities were not really entitled to tax nicotine liquids with a concentration higher than 16 mg/ml. The reason was the Swedish chemicals legislation, which classifies liquids with a concentration higher than 16 mg/ml as 'acutely toxic'. This meant that the most common variant of nicotine gums could be sold without a tax surcharge.

Overall, nicotine pouches are therefore much cheaper for the consumer than, for example, a pre-mixed e-juice with 16 mg nicotine strength, largely due to the tax.

Missed out on 34 million in tax revenue

Tax revenues from e-juice sales were much lower than expected. The department expected 78 million but only received 44 million. This was 34 million lessthe Ministry writes in its memorandum.

This is now being addressed by introducing a new category in tobacco legislation: highly concentrated nicotine liquids (15-20 mg/ml). These will be taxed twice as high as other e-liquids, at 4000 kr/l. In this way, the Ministry expects to raise an additional €46 million.

"Make the same mistake again"

But this version of the nicotine tax will not lead to higher tax revenues this time either. At least that's what Christian Brandtwho has worked for a long time with e-cigarettes and e-juice production in Sweden. Since 2011 he has run the family business Light Your Fire, with shops in Uddevalla and Gothenburg.

"To think that tax money will be made from this is completely wrong. The industry will adapt to lower nicotine levels. They will stick to nicotine below 15 mg in strength to avoid the increased tax. It will be the same as the last time," says Mr Perez. Christian Brandt

E-cigarettes are a popular way to quit smoking. And according to studies the most effective. But according to Christian Brandt, the sharply increased tax will affect the large group of people who use e-cigarettes to smoke. The price is crucial, he says. The first excise tax caused many of his customers to react negatively.

"Customers started doing the maths and many felt that using e-cigs was as expensive as smoking. So they simply started using tobacco again," says Christian Brandt.

Nicotine tax leads to more smokers

According to the Ministry of Finance's own analysis, there are currently 82,000 daily users of e-cigarettes in Sweden. And about 165,000 occasional users. To further justify the tax increase, the Ministry of Finance also points to the health effects of nicotine. "Taxing the highly concentrated e-liquid more heavily will probably reduce sales. And that promotes public health, the ministry writes.

Christian Brandt, however, thinks that the ministry misses the whole point of vejping. And that a tax is more likely to lead to poorer public health, as smoking increases instead.

"Penalising an industry in this way is not only wrong. It will also have an enormous impact on public health. More smokers will continue to use cigarettes. It is obvious that this is all about money. It is almost a criminal offence", says Christian Brandt.

The consultation period for the new tax proposal ends on 2 May. Until then, several bodies have the opportunity to comment on the proposal. Trade association for electronic cigarettes is currently preparing its official response.

You can read the full Ministry of Finance memorandum here.

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