Italian e-cigarette firms say new tax benefits tobacco

admin   •   March 2, 2015   •   2095

A man uses an E-cigarette, an electronic substitute in the form of a rod, slightly longer than a normal cigarette, in this March 5, 2013 file illustration picture taken in Paris.
CREDIT: REUTERS/CHRISTIAN HARTMANN/FILES

(Reuters) – Electronic cigarette firms in Italy say a new levy that doubles the price of e-liquid refills unfairly helps tobacco giants like Philip Morris International and will hurt their industry.

The tax, which was adopted in January, is set at half the rate of that on traditional cigarettes. The controversy centers on the fact that the lower rate is applied to both electronic cigarettes and to tobacco products such as Marlboro HeatSticks, which Philip Morris is launching in Italy alongside a 500 million euro ($568 million) factory investment.

E-cigarette companies say applying the discount to tobacco products is unfair, and designed to help Big Tobacco. The firms and industry experts also say the method of calculating the tax is too complicated and gives an unfair discount to Philip Morris’ products.

“It’s unjust,” said Massimiliano Mancini, president of ANAFE-Confindustria, a national trade association of e-cig and e-liquids producers. “It’s clear that this legislation has been drafted for other interests than just taxing the e-cigs.” He declined to elaborate.

Philip Morris would not comment on whether the new law gave it an advantage. “We have shared our views with the government via public hearings just like our competitors and others,” a spokesman told Reuters by email.

It pledged last year to make HeatSticks and other “reduced risk” products in a new factory in Bologna. Shortly before the plant’s inauguration, the firm’s CEO in Italy, Eugenio Sidoli, told the Senate Finance Committee that he welcomed the new tax rules, saying they would create “a certain and stable” regulatory outlook for the kind of investment his company was making.

Italy is one of the first countries to tax e-cigarettes; the European Union is considering the idea. The devices do not use tobacco, which contains hundreds of toxins, but instead heat liquids laced with nicotine. Many scientists agree the products are probably safer than conventional cigarettes.

Other new devices such as Marlboro HeatSticks do use tobacco and have not yet been tested to the same degree. Unless studies prove they are as safe as e-cigarettes, e-cig firms say, they should not be taxed at the lower rate.

In all, Italy collects around 12 billion euros a year in tobacco taxes. Philip Morris’ products account for 7.5 billion euros of that, according to the testimony Sidoli gave the Senate committee last October.

But Italy’s tobacco tax take has declined by more than 500 million euros since 2013. The government has said that’s partly due to the rise in e-cigarette sales. It began to think about taxing the devices in 2013 and initially introduced a tax that more than tripled e-liquid prices, and also applied to batteries and chargers sold with e-cigarettes.

That tax was blocked by Italian courts as too confusing, forcing Rome to rethink its plans. But e-cigarette distributors and some big tobacco companies object to the latest scheme, too.

The drawn-out controversy has hurt the industry in Italy, e-cig backers say. While e-cigarette use has been growing globally, the number of regular “vapers” in Italy has slumped to 255,000 from almost half a million in 2013, health ministry figures show. Thousands of e-cigarette shops have closed.

Italy’s Economy Ministry declined to comment.

“ABSENCE OF COMBUSTION”

Italy’s new law assumes that e-cigarettes are safer and should be taxed at a lower rate than traditional cigarettes. The e-cigarette lobby welcomes this but objects to extending that discount to other new products, such as the tobacco-based systems sold in Italy by Philip Morris and Japan Tobacco International (JTI), which heat tobacco in pen-like devices. The Philip Morris system uses tobacco sticks that look like mini cigarettes while JTI’s system, called Ploom, uses aluminum pods filled with tobacco.

Philip Morris says HeatSticks, which it is also testing in Japan, are potentially less harmful than traditional cigarettes “because they are not intended to be lit on fire and smoked, but rather heated and vaped.”

But neither it nor JTI include health claims in their marketing for heat-not-burn products. Philip Morris expects to have more scientific evidence during the first half of this year, its CEO told analysts earlier this month.

Even so, Italian lawmakers said in the tax decree that a tax discount on such products was justified by the “absence of combustion” which gives them “minor toxicity” compared with traditional cigarettes.

Valerio Forconi, Corporate Affairs and Legal Director in the Italian branch of tobacco giant Imperial Tobacco, says the principle of the tax is wrong.

Imperial, whose subsidiary Fontem Ventures plans to launch a new e-cig model in Rome in March, does not object to the tax charge, he said, but believes it is too high compared to tobacco products. Philip Morris’ HeatSticks can be lit and smoked, according to Forconi. This makes Italy perhaps “the only country in the world” that effectively gives Philip Morris a tax discount on smoking.

Philip Morris said HeatSticks should not be lit and smoked. “If burned,” the spokesman said, “the experience would not be pleasurable.”

(Additional reporting by Giuseppe Fonte and Steve Scherer in Rome; Edited by Simon Robinson)

G7 leaders in a show of unity in a summit that exposes rifts

Robie de Guzman   •   August 26, 2019

G7 leaders French President Emmanuel Macron, U.S. President Donald Trump, British Prime Minister Boris Johnson, German Chancellor Angela Merkel, Italian Acting Prime Minister Giuseppe Conte, Canadian Prime Minister Justin Trudeau, Japanese Prime Minister Shinzo Abe gather for a photo alongside other world leaders and invited guests. (Image grabbed from Reuters footage)

G7 leaders joined in a family photo on Sunday (August 25) at the French resort hosting the summit which has been troubled by differences between U.S. President Donald Trump and Western allies over a raft of issues.

Trump, a turbulent presence at last year’s G7 gathering, insisted on Sunday that he was getting along well with other leaders of a group that also includes Britain, Canada, France, Germany, Italy, and Japan.

But rifts emerged on issues from his intensifying trade war with China to the nuclear ambitions of both Iran and North Korea, and the question of whether Russian President Vladimir Putin should be readmitted to the group.

While the transatlantic rift is the most stark, there are also deep divisions within the European camp, with British Prime Minister Boris Johnson making his G7 debut at a time when he is struggling to persuade EU capitals to renegotiate Britain’s exit from the bloc, which Johnson has said will happen on October 31 come what may.

The G7 leaders were joined in the family photo by several African leaders as well as leaders from India, Australia, Chile and Spain, whom Macron invited to the Sunday dinner to broaden the scope of debate.

In the front row, Trump, Macron stood alongside Canadian Prime Minister Justin Trudeau, German Chancellor Angela Merkel, and Japanese Prime Minister Shinzo Abe, while Johnson stood at the end of the row. (Reuters)

(Production: Roberto Esparza, Lucy Marks)

Hong Kong government condemns violent acts

Robie de Guzman   •   August 26, 2019

(Image grabbed from Reuters footage)

The government of China’s Hong Kong Special Administrative Region (HKSAR) on early Monday morning condemned the violent acts by protesters in Kwai Tsing, Tsuen Wan and other districts on Sunday.

Protests turned violent in Tsuen Wan, in the western New Territories of Hong Kong, as radical protesters hurled petrol bombs at police officers and brutally assaulted them.

In response to the violence on Sunday, a Government spokesman said the following:

In the procession and assembly in Kwai Tsing and Tsuen Wan yesterday, despite that a Letter of No Objection had been issued following discussion between the Police and the organizer, some protesters deviated from the original route during the procession, blocked roads, confronted the police, wantonly attacked police officers with things like bricks and iron rods, and hurled petrol bombs at police vehicles and officers many times, seriously breaching the public peace and posing a grave threat to the safety of police officers on duty as well as the members of the public at the scene.

Some protesters removed a national flag at Kwai Chung Sports Ground, the assembly venue, and trampled on it. The act challenges the national authority and allegedly violates the National Flag and National Emblem Ordinance.

At night, some radical protesters vandalized with violence a number of shops in Tsuen Wan. The police officers attending the scene were attacked by a number of violent protesters at one point and, with the officers’ lives under threat, an officer fired a warning shot into the air. The radical protesters’ violent acts later also spread to various areas including Sham Shui Po, Tsim Sha Tsui and the Kowloon entrances of the Cross-Harbor Tunnel.

The escalating illegal and violent acts of radical protesters are not only outrageous, they also push Hong Kong to the verge of a very dangerous situation. The Hong Kong Special Administrative Region (HKSAR) Government severely condemns these acts and the Police will strictly follow up on them.

The HKSAR Government appeals to members of the public to combat violence and uphold the rule of law together so that order can be restored in society as soon as possible. (Reuters)

Firefighters in race against time to extinguish fires in Bolivia

Robie de Guzman   •   August 26, 2019

Firefighters battled wildfires raging through Bolivia’s Robore region and the town of San Lorenzo on Sunday (August 25) that have engulfed rural villages and doubled in size since Thursday (August 22).

Bolivian President Evo Morales on Sunday said he was now open to international aid to fight the blazes that have burned unabated across vast swaths of hilly tropical forest and savannah near Bolivia’s border with Paraguay and Brazil. At least 1 million hectares, or approximately 3,800 square miles, have been impacted by the fires, officials said.

Video filmed by firefighter David Nina showed crews extinguishing fire in bushland, and walking through burnt out forest areas. In another video filmed by evangelical church volunteer David Ortiz, volunteers are seen helping people in a town and residents fleeing from impending danger.

Bolivia late last week contracted a Boeing 747 “Supertanker” from the United States to help with the fire-fighting, and has mobilised more than 2,000 firefighters, as well as small aircraft and helicopters. But the area affected by wildfire has nonetheless nearly doubled since Thursday.

Thousands of wildfires are also decimating the neighbouring Brazilian Amazon, the world’s largest rainforest.

The blazes have nearly doubled this year compared with the same period in 2018, prompting global outrage. (Reuters)

(Production: Monica Machicao)

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