1 Case 304/01 Sept 2004 Spain v European Commission para 31 2. It - PDF document

Ref. Ares(2017)494749 - 30/01/2017 IBVTA Presentation to the Fiscalis Project Group (Tobacco) Brussels 17 th January 2017 Introduction The Independent British Vape Trade Association is the UK’s leading trade association for the vape industry, and the only one dedicated exclusively to the independent sector. All IBVTA members are free from any ownership or control by the tobacco or pharmaceutical industries. At the EU-level, IBVTA is a founding member of the European Coalition for Independent Vape. As an organisation, we are opposed to the proposals for an EU-wide excise regime for vape products because: 1. Vape products are not tobacco products and therefore should not be subjected to a tobacco style taxation regime, 2. It would be bad for public health, sending some vapers back to smoking and discouraging smokers from switching to vaping, 3. It would have a negative impact on the compliant, legitimate vape industry as some vape businesses are forced to close and as vapers go to the informal economy to buy their vape products, 4. The arguments put forward in defence of this proposal do not stand up to scrutiny and the proposal goes against core EU principles, and 5. Critically, we know from experience that it would be costly and difficult to administer, and would generate very little income compared to the wider costs associated with this proposed tax. 1. Vape products are not tobacco products and therefore should not be subjected to a tobacco style taxation regime Vape products – e-cigarettes and e-liquids – represent a market-based, user-driven, public health insurgency. No public money has been spent, yet smokers are switching and cutting down as a direct result of vaping. The principle of non-discrimination as articulated by the Court of Justice and universally applied in EU policy-making states: The principle of equal treatment or non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. 1 Vaping is not smoking, vape products are not tobacco products, and the overwhelming majority of the European vape industry is free from any control or ownership by the tobacco industry. Smoking actually damages people’s health and leads to premature death, whereas vaping does not. Smoking costs taxpayers’ huge sums of money whereas vaping saves taxpayers’ money . It therefore follows that vaping must be treated differently under this principle and not subjected, under the same directive, to an EU-wide tobacco-style excise regime. Under the principle of non-discrimination, it is not only acceptable to treat vape products differently, it is a requirement. 1 Case 304/01 Sept 2004 Spain v European Commission para 31

2. It would be bad for public health, sending some vapers back to smoking and discouraging smokers from switching to vaping Across the EU there are at least 15 million vapers, of whom 6.1 million have fully quit smoking as a direct result of vaping 2 . This should be a cause for celebration, not extra taxation! There is never a situation in which it is better to smoke than to vape. We know from research produced by the UK Office of National Statistics 3 and others that 99.9% of vapers are current or former smokers, therefore when considering the harm associated with vaping; it is how harmful it is compared to smoking. According to Public Health England and the Royal College of Physicians, vaping is at least 95% less harmful than smoking 4 . This was a point considered by the Ramboll study which concluded that the lack of evidence on the negative health impacts of vaping “makes the case for imposing excise duty on e - cigs rest on weak foundations.” Vaping has contributed to record low levels of smoking in the UK 5 and has significantly reduced smoking rates in other EU Member States. Despite this success, according to the Commission’s own figures, 26% of the EU population and 25% of young Europeans aged 15-24 still smoke 6 . This results in nearly 700,000 deaths every year 7 . Policy makers at all levels should be focussed on reducing this figure. Conventional nicotine replacement therapies, with their 90% 8 failure rate are not capable of doing this, but vaping could and is. If proposals for additional taxation are withdrawn, then vaping will continue to flourish and fulfil its potential in providing a viable and significantly less harmful alternative to tobacco products. However, if they do not then smokers will not make the switch and a once in a life time opportunity will have been missed. It is within this context that the debate surrounding the potential levying of excise on vape products must be considered. After all, EU policies, including taxation and the internal market, should be defined and implemented with a view to a high level of health protection. Article 168 of the Treaty on the Functioning of the EU enshrines this principle, when it states: A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities. 9 3. It would have a negative impact on the compliant, legitimate vape industry as some vape businesses are forced to close and as vapers go to the informal economy to buy their vape products The overwhelming majority of vape businesses are independently owned SMEs employing a small number of people. Unlike VAT, excise is not a tax that companies simply collect, it is a tax that comes with significant costs. The independent vape industry does not have the experience of operating such a tax regime. We have calculated that implementing such a regime would cost a typical IBVTA manufacturing member £50,000 to implement and £40,000 annually to administer. These are significant sums of money, particularly coming on top of the vast sums of money the industry is currently spending to comply with the EU’s Tobacco Products Directive (TPD). Compliancy costs associated with the TPD have already forced a number of businesses to close. We know from Italy and Portugal that excise would have the same impact. 4. The arguments put forward in defence of this proposal do not stand up to scrutiny and the proposal goes against core EU principles We have already explained why we believe this proposal goes against the EU principles of high level health protection and non-discrimination. 2 http://www.ecigarette-research.org/research/index.php/research/research-2016/241-eurob 3 http://www.ons.gov.uk/ons/rel/ghs/opinions-and-lifestyle-survey/adult-smoking-habits-in-great-britain--2013/stb-opn-smoking-2013.html 4 https://www.gov.uk/government/news/e-cigarettes-around-95-less-harmful-than-tobacco-estimates-landmark-review and https://www.rcplondon.ac.uk/projects/outputs/nicotine-without-smoke-tobacco-harm-reduction-0 5 http://www.cancerresearchuk.org/about-us/cancer-news/news-report/2016-08-02-smoking-rate-hits-low-in-england#E031SyGC4XSH9isg.99 6 http://ec.europa.eu/health/tobacco/policy_en 7 Ibid 8 Director of the Duke Centre for Smoking Cessation and a Professor in the Department of Psychiatry and Behavioral Sciences at Duke University Medical Centre, speaking at the Global Forum on Nicotine (Warsaw, Saturday 6th June 2015): http://gfn.net.co/downloads/2015/Plenary%202/Jed%20Rose.pdf 9 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E168:EN:HTML