The Italian Finance Commission will launch an investigation into the retail taxation system for cigarettes and new tobacco goods, and for the first time, the vape industry will be invited to participate in the voting dialog. The investigation will have until December 31, 2024, to complete various tasks to assess illegal sales and changes to the tax system.
Italy is to launch an inquiry into tobacco taxation
Sig magazine reported on September 17 that the Finance Committee of the Italian Chamber of Deputies will launch an investigation into the tax system for retail sales of cigarette products and the licensing system for new tobacco goods on the afternoon of September 18, local time.
The Italian Federation of Tobacco Business (Unione Italiana Tabaccai, Uit), the Association of Tobacco Merchants (Assotabaccai), and the Italian Federation of Tobacco Business (Federazione Italiana Tabaccai, Fit) are waiting for this chamber to appear.
The vape industry participated in the parliamentary dialogue for the first time
It is expected that on Sep 19, the committee will decide on the next target of the hearing, which will include the three Italian vape industry associations, the Association of Street Retailers (Uniecig), the Association of E-Commerce (Aive), and the Association of Manufacturers and Retailers (Anafe). The Presidency can also add other organizations and stakeholders as needed. This is the first time that Italian politics has formally invited the industry to dialogue and recognized it as a formal dialogue partner, something that has never happened before on either side.
Traditional Italian cigarette goods, particularly tobacco, are reportedly losing market share, while the market share of new tobacco goods has soared from 4% to 18% in just four years (2019 to 2023). According to the European Commission, there are no harmonized regulations for new tobacco goods in Europe, which leads to tax disparities and even encourages cross-border purchases and smuggling.
Electronic cigarette industry tax issues
In light of changes in consumer behavior and sales trends, Italian legislators redesigned the tax system for cigarette products. During the 17th Chamber, in addition to reforming the tax structure and standards for processed cigarettes, an excise tax was imposed on non-combustible inhalable cigarettes and alternative tobacco oils in vapes. The excise tax rates on these products have been adjusted several times over the past few years.
The Finance Bill 2020 also introduces excise duty on cigarette accessories such as filters and cigarette papers. Beginning May 1, 2024, smokeless tar-free vape components will also be subject to excise tax.
The House Committee therefore believes that it would be useful to understand the integrity of the cigarette chain and the evolution of the tax system through an investigation. There is also a need to assess illicit sales and smuggling. The “Italian Federation of Tobacco Businesses (Fit)” reports that the illicit tobacco market totals more than 1 billion euros, resulting in a loss of about 620 million euros in Chinese tax revenues and 120 million euros for tobacco distributors.
By December 31, 2024, the work of the Commission must be completed.
