The government does not want to discourage tobacco smokers from switching from smoking to vaping, and therefore it proposes a tax rate that is 77% lower than the one imposed on regular cigarettes.
The Federal Council is proposing extending the current tax on tobacco onto vaping liquids, and plans to do so at a rate that reflects the lower toxicity levels of the products. The government does not want to discourage tobacco smokers from switching from smoking to vaping, and therefore it proposes a tax rate that is 77% lower than the one imposed on regular cigarettes.
Additionally, the e-liquid tax is planned to be relative to the different nicotine contents in the products. In fact one idea is to tax the nicotine content in vape liquids for open systems, which means that taxes would increase with with rising nicotine content. While for disposable devices or ones using cartridges, the tax would be based on the quantity of liquid contained in them regardless of the nicotine content.
The government believes that such a tax could be easy to enforce and would generate around CHF 15.5 million a year, which could go towards social services. The Federal Council’s proposal, which will be discussed until 31 March 2022, responds to a motion approved by the parliament and the Council of States in March 2021.
Effects of tobaccco tax rates on adult consumption
Meanwhile, a recent study published in the Journal of Risk and Uncertainty, looking at the effects of traditional cigarette and e-cigarette tax rates on adult tobacco consumption rates, found that increased tax rates on vaping products are directly proportional to increased smoking rates.
The study titled, “The effects of traditional cigarette and e-cigarette tax rates on adult tobacco product use,” analysed the effects of taxes on traditional cigarettes and vaping products, on use patterns of these same products among adults in the United States. The researchers examined data from the Behavioral Risk Factor Surveillance System and National Health Interview Survey (NHIS), over the period from 2011 to 2018.
The research found evidence that higher taxes on traditional cigarettes reduce adult smoking and increase adult e-cigarette use. Similarly, higher e-cigarette tax rates increased traditional cigarette use and reduced vaping.
“Cross-tax effects imply that the products are economic substitutes. Our results suggest that a proposed national e-cigarette tax of $1.65 per millilitre of vaping liquid would raise the proportion of adults who smoke cigarettes daily by approximately 1 percentage point, translating to 2.5 million extra adult daily smokers compared to the counterfactual of not having the tax,” read the study Abstract.
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