Electronic Cigarettes Will Also Be Taxed in Switzerland

Electronic cigarettes are set to face taxation in Switzerland following the approval of the Federal Council’s plan by the Council of States and the National Council. While the tax on e-cigarettes will not be as high as that on traditional cigarettes, it aims to generate revenue for the Federation. This article explores the details of the tax plan, its implications, and the different perspectives surrounding it.

Introduction

After receiving the green light from both the Council of States and the National Council, the Federal Council’s proposal to tax electronic cigarettes has been finalized. Although the tax on e-cigarettes will be lower compared to traditional cigarettes, it will still contribute to the Federation’s funds, specifically to support old-age and disability insurance.

To ensure appropriate taxation, e-cigarettes will be categorized into two types: reusable and disposable. Reusable e-cigarettes will only have the e-liquids containing nicotine taxed, while disposable e-cigarettes will have the entire device taxed. This categorization aims to strike a balance between encouraging smokers to quit and deterring young individuals from starting smoking habits.

Taxing Reusable E-cigarettes

For reusable e-cigarettes, the tax rate will be set at 20 cents per milliliter of liquid containing nicotine. This deliberate low rate is designed to support individuals who are using e-cigarettes as a means to quit smoking. By keeping the tax rate low, the government aims to provide an incentive for smokers to transition to a less harmful alternative.

Taxing Disposable E-cigarettes

Disposable e-cigarettes, regardless of their nicotine content, will be subject to a fee of 1 franc per milliliter of liquid. The higher tax rate for disposable e-cigarettes is aimed at discouraging young people, who are particularly attracted to these products, from initiating smoking habits. The goal is to make disposable e-cigarettes less appealing and less accessible to this demographic.

Perspectives on Tax Calculation

Different political parties and stakeholders have expressed varying perspectives on the tax calculation for electronic cigarettes. While the finalized plan aligns with the Federal Council’s proposal, there have been alternative suggestions.

Tax Too High for the Right

The Swiss People’s Party (UDC) argued that the proposed tax rate was too high. They attempted to reduce it to 11 cents, emphasizing that vaping carries significantly lower health risks compared to traditional cigarettes. Similarly, the Liberal Party (PLR) advocated for a 15-cent tax rate, citing neighboring countries’ practices. However, both proposals were rejected by the National Council, which upheld the Federal Council’s plan.

Tax Too Low for the Left

On the other side of the spectrum, the left-leaning parties had concerns regarding the tax rate for disposable e-cigarettes. They suggested that the tax should be based on nicotine content rather than the volume of liquid. Their argument was that a quantity-based tax could potentially incentivize manufacturers to increase nicotine levels, making smokers more addicted. However, Finance Minister Karin Keller-Sutter countered this argument, stating that smokers who are trying to quit often require higher nicotine concentrations during the initial stages of their transition. Taxing based on nicotine content could make e-cigarettes less attractive for those attempting to quit.

Sophie Michaud Gigon of the Greens/VD proposed an alternative approach, suggesting a tax rate of 50% based on the retail selling price of disposable e-cigarettes. However, her proposal did not gain sufficient support. Minister Karin Keller-Sutter also pointed out that the proposed taxation for disposable e-cigarettes in Switzerland was already higher compared to other countries. Additionally, implementing a retail price-based tax would be complex due to the wide range of products available at different prices.

No Changes for Chewing or Snuff Tobacco

Apart from electronic cigarettes, the left and the Green Liberals also sought to increase tax rates for heated, chewing, and snuff tobacco. However, their efforts were unsuccessful. Furthermore, the left proposed that manufacturers, importers of tobacco and nicotine products, as well as electronic cigarettes, contribute to a tobacco prevention fund. This proposal, however, was not pursued further.

Conclusion

Switzerland’s decision to implement a tax on electronic cigarettes reflects an approach that aims to strike a balance between discouraging smoking initiation and supporting individuals in their efforts to quit. The finalized tax plan, which differentiates between reusable and disposable e-cigarettes, reflects the considerations of various political parties and stakeholders. By generating revenue through taxation, the government seeks to provide financial support to old-age and disability insurance programs.