Italy will launch a tobacco tax system investigation. The market share of new tobacco products has increased to 18% in four years.

Italy will launch a tobacco tax system investigation. The market share of new tobacco products has increased to 18% in four years

The Italian Finance Committee will launch an investigation into the retail tax system for tobacco and new tobacco products. For the first time, the e-cigarette industry has been invited to participate in the voting dialogue. In just four years (2019 to 2023), the market share of new tobacco products has rapidly climbed from 4% to 18%. The investigation will assess issues such as illegal sales and tax reform, and all work must be completed by December 31, 2024.

According to Sigmagazine on September 17, the Italian House of Representatives Finance Committee will launch an investigation into the retail tax system and franchise system for tobacco products and new tobacco products on the afternoon of September 18 local time.

The Italian Tobacco Merchants Federation (Unione Italiana Tabaccai, Uit), the Tobacco Merchants Association (Assotabaccai) and the Italian Tobacco Merchants Federation (Federazione Italiana Tabaccai, Fit) will appear in this parliament.

It is expected that on September 19, the committee will decide on the next hearing object, and three associations in the Italian e-cigarette industry will be included, the Street Retailers Association (Uniecig), the E-Commerce Association (Aive) and the Association of Production and Retailers (Anafe). The Bureau can also add other institutions and stakeholders as needed. This is the first time that Italian politicians have formally invited the industry to a dialogue, recognizing its status as a formal dialogue partner, which has never happened before.

It is reported that traditional tobacco products in Italy, especially cigarettes, are gradually losing market share, while new tobacco products have soared from 4% to 18% in just four years (2019-2023). According to the European Commission, there is no unified regulation of new tobacco products across Europe, which leads to tax differences and even encourages cross-border purchases and smuggling.

In view of changes in consumer behavior and sales trends, Italian legislators have redesigned the tax system for tobacco products. During the 17th Parliament, in addition to reforming the tax structure and standards for processed tobacco, excise taxes were imposed on non-combustion inhalation tobacco (HNB) and alternative e-cigarette oils in e-cigarettes. The excise tax rates for these products have been adjusted several times in the past few years.

The 2020 Finance Bill also introduced an excise tax on tobacco accessories, such as filters and cigarette papers. From May 1, 2024, nicotine-free e-cigarette ingredients will also be subject to excise taxes.

The House of Representatives Committee therefore believes that it is useful to conduct an investigation to understand the integrity of the tobacco industry chain and the evolution of the tax system. In addition, illegal sales and smuggling phenomena need to be evaluated. The report of the Italian Tobacco Merchants Federation (Fit) pointed out that the total value of the illegal tobacco market exceeds 1 billion euros, resulting in a loss of about 620 million euros in tax revenue for the state and about 120 million euros for tobacco merchants.

All the work of the committee must be completed by December 31, 2024.