Vapocalypse Now: The Government’s Latest Scheme to Drain Your Wallet!”
As of the beginning of 2020, Germany’s draft law on the taxation of tobacco products has not yet become a reality for the vaping community.The initial plan to levy taxes on e-cigarettes and especially on liquids , which have the nicotine content as a basis for assessment, was rejected and a flat volume-based taxation of all liquids for e-cigarettes was decided.
A tobacco tax is not only levied on all liquids but also on flavors, bases and nicotine shots as well as raw materials such as VG and VG .Despite many protests, the modernization of the Tobacco Tax Act (TabStMoG) was decided by the German Parliament on June 11, 2021 and published in the Federal Law Gazette on August 17, 2021. The tax on conventional tobacco cigarettes will also be gradually increased in Germany and the far less harmful alternative, the e-cigarette, will be subject to a disproportionately high tax by law .But how deep will vapers have to dig into their pockets in the future if the law has to be implemented as of July 1st, 2022? We give answers.
Vaping will get more expensive
The draft came from the Ministry of Finance , where Olaf Scholz from the SPD was still Federal Minister of Finance at the time and had expected substantial additional income. Here arguments were made with the protection of minors, addiction and health hazards. The scandalous thing is that the EU has been planning a uniform minimum tax for e-cigarettes for some time – which should then apply to all countries throughout Europe. Which makes sense, because it avoids a dangerous black market that would inevitably arise if Germany “does its own thing.”
Until the expert hearing in the Finance Committee on May 17, 2021, the draft provided for a gradual increase based on the nicotine content. It should start in 2022 with 2 cents per milligram of nicotine in liquid. The intended goal was to double the tax to 4 cents per milligram by 2024.
After the SPD could not get approval from all other parties for the aforementioned nicotine-based taxation , the next plan for taxation came on the table. The new bill has been changed to a volume-based tax on all e-cigarette liquids . All ( including nicotine-free ) liquids for e-cigarettes will now be subject to a tobacco tax as a substitute for tobacco products .
Breathing Fine: Government to Impose Tax on Vapers
The SPD and the CDU/CSU parliamentary group have agreed on a new type of taxation and the Bundestag has approved the draft law. According to this, all nicotine-free and nicotine-containing liquids for e-cigarettes produced from July 1st, 2022 will be taxed at 0.16 euros per ml with the tobacco tax (as a substitute for tobacco products). In four steps, by 2026, it should then rise to 0.32 euros per ml . Shortfill liquids, flavors, bases and nicotine shots will also be affected.In plain language, the law means that for every 10ml bottle of liquid
1.from 01.07.2022 1.60 euros ,
2.from 01.01.2024 2.00 euros,
3.from 01.01.2025 2.60 euros and
4.from 01.01.2026 3.20 euros add tobacco tax.
As usual in Germany, the tobacco tax is then calculated on the net price and then the value added tax is added . Ie effectively it is not 1.60 euros that the tax authorities take per 10 milliliters, but at least 1.90 euros. In the last stage from 2026 then an incredible 3.80 euros per 10ml.The same fleet steamer liquid , whether with or without nicotine, which now costs 3.90 euros, would then initially cost at least 5.80 euros (77% tax share based on the net price) and in future from 2026 at least 7. 70 euros (135% tax portion) must cost. After full implementation, all finished liquids will be almost twice as expensive as before .
EU plans flavor ban
As part of the TPD3, the EU is planning a ban on flavors for e-cigarettes, among many other changes. The plan currently envisages only allowing tobacco flavors in/for e-cigarettes. We certainly don’t have to explain what that means for the vaping world.The VdeH (Association of the e-cigarette trade) therefore launched a campaign ” My e-cigarette, my decision ” at short notice, in which all vapers should take part as soon as possible. Every individual vaper can tell the EU directly what the variety of flavors and the switch to e-cigarettes mean for them personally by June 17th, 2022 .
Are the raw materials PG & VG and also flavors taxed?
On August 19, 2021 , a consultation took place between the BfTG and the Federal Ministry of Finance as well as the Border Customs Directorate , which was intended to clarify open questions about the law. Below is a brief excerpt of the most important statements:
Which products are subject to the tax?
All liquids that are used for vaping – from the finished liquid to short fills, flavors, bases & shots.
Also the individual components such as PG & VG if they are sold or bought for use in e-cigarettes.
The tax stamp must be attached in such a way that it breaks when the packaging is opened. The packaging must not be able to be opened any further. In addition, the banderoles must be securely and firmly attached.
A tax-free sale by other means constitutes a tax crime, according to the ministry and customs.
According to customs, even the purchase of the raw materials (VG, PG, aromas) in other ways and the subsequent use in an e-cigarette represents a tax offense by the individual vaper.
By when do liquids without a tax stamp have to be sold off?
Everything that was manufactured/imported before July 1st, 2022 can be sold without a tax stamp.
However, there is a transition period until February 12th, 2023 , so that before July 1st manufactured liquids can still be sold without the new tax.
On February 13, 2023, no more untaxed goods may be on the shelves.
The e-cigarette market will change
In 2023, the new tax will change the German market for e-cigarettes. The current dumping, especially in the area of bases and shots, will stop and all products will have to be given priority again as smoker substitutes .
1. Mixing it yourself will no longer be worthwhile, but will still be cheaper than ready-made liquids.
2.Liter bases will probably disappear from the German market due to the high price and will probably no longer be offered in vape shops by 2023 at the latest.
3.Shortfill liquids are becoming significantly more expensive, so that they are only bought by vapers who already know the taste and do not want to buy the expensive “pig in a poke”. It remains to be seen whether they will persist in large numbers.
4.There will no longer be numerous flavors , since the smaller flavor manufacturers in particular can hardly bear the very high costs for the necessary cartoning machines and a bonded warehouse. Irrespective of this, sales of flavors could also decrease significantly from 2023, when self-mixing will no longer be so attractive.
5.Since products that are subject to the German tobacco tax can no longer be offered together with other products in a set (ban on extras), long-fill liquids will disappear from the market as ” bottle-in-bottle ” variants , since the 120ml bottle would be a forbidden free addition.In addition, retailers will then no longer be able to offer any discounts or reimbursements for substitutes for tobacco products . Say volume discounts or the like are then inadmissible.
6.Lung vaporizers that produce extremely large clouds become a luxury item , since later on hardly anyone can afford the high liquid consumption of these devices.
7.Backendampfer (MTL devices) will determine the German market , as they produce smaller amounts of vapor and cause less liquid consumption.
8.Many Vapping shops will get into financial difficulties and may have to give up. So not only does the tax have to be pre-financed by them, but also the resulting sales gap after the bunker phase has to be bridged.
9.The Vapers will turn again in smoke and smoke industry ma
Is it still worth switching at all?
Especially in social media we read a lot of statements like”
Then everyone grabs the tobacco cigarette again,””
Vaping will then be a thing of the past” or”
Then no one will switch to e-cigarettes anymore.”
Unfortunately, negative propaganda is being carried out here , which is not entirely true and is unnecessarily damaging to the industry.
If you look at the e-cigarette as a pure smoker’s substitute and use a normal cheek steamer that produces normal amounts of steam, an average smoker (20 cigarettes/day) gets by with 10ml ready-to-use liquid for about 2-3 days if the nicotine content is not too low. In the first tax level, a fleet of liquid vaporizers will cost around 6 euros, for example, and is comparable to around 2 packs of cigarettes. So why should you go back to tobacco cigarettes? Especially since you have to keep in mind that tobacco cigarettes are also becoming more and more expensive and that, in addition to the financial aspect, the health aspect is not insignificant.
The starting point for such statements is, viewed soberly, self-mixing and the use of lung vaporizers, which produce an extremely large amount of vapour. In the early days of e-cigarettes, there were only ready-made liquids and vaporizers with low liquid consumption. Then gradually the individual components of the liquid were also sold in order to be able to sell lung vapers with high liquid consumption more easily. A self-mixed liquid costs only a fraction of the ready-made liquidand the very high liquid consumption could be compensated.
The market was quickly flooded with ever cheaper bases and nicotine shots as well as ever larger “fog machines”. There was hardly any comparison to the cost of smoking and only looked at how you can vape even cheaper and save even more.We are not proponents of the tax. To be honest, however, you have to realize that an effective smoker’s substitute was previously possible at a dump price if you mixed it yourself. With the introduction of the tax, it will be more expensive, but vaping is still less harmful and still cheaper than smoking . Mixing it yourself with 10ml shots in the appropriate nicotine strength is still cheaper than a ready-made liquid, but the savings are no longer in the range that they used to be in