The Polish Senate did not adjust the revised consumer tax law, but the new tax rate could cause vape customers to turn to the illegal market and hit legitimate small and medium-sized businesses.
Polish Senate Passes Vape Excise Tax Revisions
According to Dlahandlu on October 30, the Polish Senate did not adjust the revised consumption tax law, which will be submitted to the president for signature. The main purpose of this amendment is to adjust the so-called excise duty increase plan for tobacco products.
The new regulation, which has a larger increase in tax rates than the original plan, aims to increase state budget revenues by 3.5 billion zlotys ($870 million) per year.
Association says new tax may exacerbate buying costs
Fusion Vice President of the Polish vape Association Przemys? aw Jaskolesa, member of the Board of Directors and Vice President of the Polish vape Association, said,
- “The adjustments recommended by the Treasury Department and approved by the Senate could backfire. The planned excise tax on e-vape will increase to 327% of the current rate, and a new tax may be imposed on the system, including components. This can result in many people being unable to bear the financial cost of these products. Currently, it costs customers about 15 zlotys ($4) per week to buy the necessary accessories, which could increase to 65 zlotys ($16) per week after the reform, spending hundreds of additional zlotys per month. Many customers who choose vapes as a smoke-free alternative may not be able to afford such a high cost.”
Yaskova noted that the changes may only increase the trend to buy cheaper, non-taxable goods. The gray market accounts for about 50 percent of the vape market. According to an estimate by the Polish vape Association, the illegal product trade costs the state budget 1 billion zlotys ($240 million) a year.
- “The new laws and regulations will mainly hit legitimate Polish SMEs, forcing their customers into the grey market, and some manufacturers may even exit the market.” While the tax increase is understandable, it should be in line with consumers’ actual capabilities and take into account the existing grey market, otherwise, it will reduce government revenue and expose consumers to health risks from the uncontrolled circulation of goods.”
Under the revised bill, the fixed tax rate on tobacco will increase by 25 percent in 2025, 20 percent in 2026, and 15 percent in 2027. The fixed tax rate on tobacco used for smoking will increase by 38% next year, 30% in 2026, and 22% in 2027.
The tax rate will remain in effect until February 28, 2025, and the new rate will take effect from March 1 to December 31, 2025.
