Recently, the State Council amended the implementation regulations of the Tobacco Monopoly Law to formally include e-cigarettes in the scope of tobacco management, clarifying that "e-cigarettes and other new tobacco products shall be implemented in accordance with the relevant regulations of cigarettes in this regulation."
This move aims to strengthen the supervision of electronic cigarettes, regulate its production and operation activities, and protect the interests of consumers.
Several fiscal and taxation experts told China Business News that there is currently no consumption tax on e-cigarettes.
Since many e-cigarettes contain nicotine and other substances, which affect people's health, especially young people, it is recommended that e-cigarettes be included in the scope of consumption tax collection.
The scale of the e-cigarette market has expanded rapidly in recent years. Statistics show that the domestic retail sales of e-cigarettes in China last year reached 14.5 billion yuan, a year-on-year increase of 30%.
"At present, there are no electronic cigarettes in the tax items of the Provisional Regulations on Consumption Tax, and the consumption tax law under legislation does not include e-cigarettes in the scope of taxation. Therefore, the state does not impose a consumption tax on e-cigarettes." Chinese Academy of Social Sciences and China Institute of Financial Strategy Associate researcher Jiang Zhen told CBN.
At present, there are cigarettes in the consumption tax items, including cigarettes, cigars and shredded tobacco.
For example, in the industrial production of cigarettes, the tax rate for category A cigarettes is 56% plus RMB 0.003 per stick, and the tax rate for category B cigarettes is 36% plus RMB 0.003 per stick.
For the commercial wholesale of cigarettes, the tax rate is 11% plus RMB 0.005 per cigarette.
Shi Wenwen, director of the Finance and Taxation Law Research Center of China University of Political Science and Law, told China Business News that the reason why a consumption tax is levied on cigarettes is because it is harmful to human health and second-hand smoke affects the health of surrounding people. Therefore, consumption tax is used to curb smoking.
Electronic cigarettes also have the same problem. At present, electronic cigarettes are implemented in accordance with the relevant regulations of cigarettes and enter the monopoly system. Similarly, electronic cigarettes should also be included in the scope of consumption tax to regulate and guide consumption.
"E-cigarettes should be taxed with reference to cigarettes." Yang Zhiyong, a researcher at the Institute of Financial Strategy of the Chinese Academy of Social Sciences, told China Business News.
The text of the application believes that a separate e-cigarette sub-item can be established under the tobacco tax item, and a differential tax rate can be set in consideration of the type of e-cigarette, the degree of harm, etc. The method of collection can be ad valorem, and the specific tax rate should be calculated based on specific conditions. Decide.
Associate Professor Xi Xiaojuan from Northwest University of Political Science and Law told China Business News that e-cigarettes are a type of consumer product designed to deliver nicotine to the lungs, similar to cigarettes or cigars.
The state imposes a consumption tax on cigarettes in order to improve the health of the whole people and promote the prevention and control of environmental pollution. Although e-cigarettes are considered as alternatives to cigarettes, the World Health Organization’s "China Smoking Hazards to Health Report 2020" pointed out: There is sufficient evidence that e-cigarettes are unsafe , It will cause health hazards.
"The number of people aged 15 and above using e-cigarettes in China is about 10 million. If not strictly regulated, it is poisoning the health of the next generation. Based on this, the tax rate of e-cigarettes should be levied in accordance with the tax rate of category A cigarettes to reduce environmental pollution and youth Health hazards." Xi Xiaojuan said.
Shi Zhengwen believes that if a consumption tax is imposed on e-cigarettes, if time is tight, the Ministry of Finance can adjust the consumption tax items to include e-cigarettes with the approval of the State Council.
If the current consumption tax legislation is progressing rapidly, electronic cigarettes can also be included in the tax items of the consumption tax law, which will be implemented after the Standing Committee of the National People's Congress passes the consumption tax law.
Xi Xiaojuan said that the scope of consumption tax collection is statutory. Therefore, if e-cigarettes are included in the scope of consumption tax collection, the "Interim Regulations on Consumption Tax" need to be revised.
It is most likely that when the consumption tax law is formulated, electronic cigarettes are classified as "cigarettes"-electronic cigarettes (new sub-tax items), and consumption tax is levied.
According to the World Health Organization's "2021 Global Tobacco Epidemic Report", at least 29 countries have levied excise taxes on e-cigarettes.
There are different taxation methods in different countries, some are based on the price of e-cigarettes, and some are based on the volume of e-cigarette oil.
Yang Chang, head of the policy group and chief analyst of the Zhongtai Securities Research Institute, wrote that from the perspective of the effect, the sales of e-cigarettes may be affected in the short term after the consumption tax is imposed; but after 2-3 years, it will be restored to the pre-levy level and Continue to grow, such as Portugal and Russia.
However, if the consumption tax rate is too high, it will also have a negative impact. A typical representative is South Korea. Due to the high tax rate and the crowding effect of heat-not-burn tobacco, the scale of the e-cigarette market has been slow to repair.
Author: Chen Yikan