The Spanish government has launched a plan to tax nicotine in e-cigarettes in a bid to seek new tax revenues, according to a report by inspanje.nl on 29 October. The measure is part of a broader tax reform being discussed in Congress.

Currently, e-cigarettes are only subject to VAT. The government proposes to tax nicotine-containing liquids at the same rate as traditional tobacco products. Specifically, the Ministry of Health proposes a tax of €0.15 per milliliter of liquid, an amount in line with the European average, and an additional tax of €0.006 per milligram of nicotine. It is expected that the average tax rate on e-cigarettes in Spain will be 35.6 percent. The public health department said that this new tax scheme is intended to reduce the use of e-cigarettes and generate additional revenue for state coffers.

The Spanish government’s policy of taxing nicotine in e-cigarettes can be analyzed from several perspectives:

A public health perspective: by taxing e-cigarettes, the government hopes to reduce their use, especially their appeal to the youth population, which could help to reduce the health risks associated with smoking. This measure is in line with the public health strategy adopted by many countries.

Revenue: The policy generates additional tax revenue for the government, which is positive for easing fiscal pressures and supporting public services, especially health-related programs.

Market impact: Taxation of e-cigarettes may increase their prices, which could affect consumption patterns and reduce demand for certain brands. This may lead to a reshuffling of the market and affect the profitability of the companies concerned.

Consumer reaction: Consumers may express dissatisfaction with the increased tax, particularly if this leads to a significant increase in product prices, which may drive some users to non-compliant products, increasing potential health risks.

Fairness of policy implementation: Whether the harmonization of tax rates for all e-cigarette products takes into account the risk levels and usage scenarios of different products may affect the fairness and acceptability of the policy.

Overall, the implementation of this policy may strike a balance between public health and fiscal revenue, but its long-term effects remain to be seen, including the specific impact on e-cigarette consumption behavior.