Polish Senate approves e-cigarette tax hike, industry warns of rising consumer costs

Oct.31.2024
Polish Senate approves e-cigarette tax hike, industry warns of rising consumer costs
Polish Senate passes excise tax bill unchanged; new rates risk pushing e-cigarette users to black market, hitting legal small businesses.

The Polish Senate has passed the excise tax amendment without changes and the bill is now to be approved by the president, according to an October 30 report by Dlahandlu. 

 

The amendment aims to adjust excise taxes on tobacco products, with an annual increase of 3.5 billion zlotys ($870 million) for the state budget.

 

The new regulations impose higher tax rates than originally planned. Przemysław Jaskóła, a board member at Fusion Labs and vice president of the Polish Vaping Association, said: “The adjustments proposed by the Ministry of Finance and passed by the Senate may have unintended consequences. The planned excise tax on e-liquids is set to increase by 327%, with potential new taxes on devices and even parts." 

 

"This could make these products financially out of reach for many. Currently, users spend around 15 zlotys ($4) weekly on essential accessories, which could rise to 65 zlotys ($16), amounting to hundreds of zlotys in additional monthly costs. Many consumers who chose vaping as a smoke-free alternative may be unable to afford these increases.”

 

Jaskóła noted that these changes could drive demand for cheaper, untaxed products, with the grey market already accounting for about 50% of the e-cigarette market. According to the Polish Vaping Association, illegal products result in annual losses of 1 billion zlotys ($240 million) for the national budget.

 

“The new regulations will hit Poland’s legally operating small and medium-sized businesses hardest, pushing their customers towards the grey market, and may even force some manufacturers to exit the market. While tax increases are understandable, they should align with consumer purchasing power and account for the existing grey market. Otherwise, they risk reducing government revenue and exposing consumers to health risks from unregulated products.”

 

Under the revised bill, the excise tax rate on cigarettes will rise by 25% in 2025, 20% in 2026, and 15% in 2027. The excise tax on smoking tobacco will increase by 38% next year, 30% in 2026, and 22% in 2027.

 

Current rates remain in effect until February 28, 2025, with new rates set to apply from March 1 through December 31, 2025.

 

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