E-cigarette prices will be raised by nearly 11% for wholesalers

Source: DHgate, Tag: Home Garden

On October 25, the Ministry of Finance announced the "Announcement on Levying Consumption Tax on Electronic Cigarettes" (hereinafter referred to as the "Announcement"). The "Announcement" shows that units and individuals that produce (import) and wholesale e-cigarettes within the territory of the People's Republic of China are taxpayers of consumption tax, and e-cigarettes are calculated and paid by the method of ad valorem pricing. The tax rate for the production (import) a link is 36%, and the tax rate for the wholesale link is 11%.

Electronic cigarettes refer to electronic transmission systems used to generate aerosols for human inhalation, etc., including cartridges, smoking accessories, and electronic cigarette products sold in combination with cartridges and smoking accessories. Cartridges refer to electronic cigarette components that contain atomized substances. Smoking devices refer to electronic devices that atomize aerosols into inhalable aerosols.

This time, a consumption tax is levied on e-cigarettes. Consumption tax is a general term for various taxes that are taxed on the turnover of consumer goods. It is a tax levied by the government on consumer goods. The collection process is single, and most of them are paid in the production or import process. Consumption tax is a typical indirect tax, and the tax is ultimately borne by consumers.

The levy of an e-cigarette consumption tax will inevitably increase the cost of e-cigarette consumers. An industry person calculated that assuming the production price is 20 yuan, the tax burden is 7.2 yuan according to the 36% tax rate; assuming the wholesale price is 100 yuan, according to the 11% tax rate, the tax burden is 11 yuan, and the total of the two is 18.2 yuan. On the premise that e-cigarette products do not take the initiative to reduce prices, the tax burden is ultimately borne by consumers.

"Tobacco and alcohol production may be sold at low prices to their own sales companies, resulting in the loss of consumption tax, so an additional consumption tax is levied in the sales process." The above-mentioned industry sources told reporters.

Expectations of an excise tax on e-cigarettes have always existed.

Li Hua, director of the Tax Economic Research Center of Shandong University, told reporters that the consumption tax catalog itself includes tobacco and alcohol, and the inclusion of e-cigarettes in the tobacco catalog expands the taxation scope of consumption tax in the tobacco catalog, improves the consumption tax system, and makes better use of consumption tax to guide health. The role of consumption. Secondly, e-cigarettes are also a kind of tobacco. From the perspective of health, especially from the perspective of protecting minors, it should be included in the scope of taxation.

On November 26, 2021, the "Decision of the State Council on Amending the Implementation Regulations of the Tobacco Monopoly Law of the People's Republic of China" (hereinafter referred to as the "Decision") was officially promulgated and implemented. The "Decision" clarifies that "new tobacco products such as electronic cigarettes shall be implemented in accordance with the relevant regulations on cigarettes in this Regulation." On March 11, 2022, the State Tobacco Monopoly Administration issued the "Measures for the Administration of Electronic Cigarettes", which will come into effect on May 1, 2022. The "Administrative Measures for Electronic Cigarettes" clarifies the definition and regulatory objects of electronic cigarettes and brings the production and quality management, sales management, import and export trade, and foreign economic and technical cooperation of electronic cigarettes under the supervision of the tobacco monopoly administrative department. The market order of electronic cigarettes.

In August 2022, the article "Research and Analysis on the Collection of Consumption Tax on Electronic Cigarettes" published by "Taxation Research" mentioned that tobacco consumption has a certain price elasticity, and part of the tax burden will be passed on to consumers after the consumption tax is imposed on it. Reduce the amount of consumption by consumers to achieve the effect of tobacco control. At present, my country has levied consumption tax on cigarettes and other tobacco products, so as to achieve the goal of "exclusion of prohibition and collection" of cigarettes and other tobacco products that are harmful to health. For e-cigarettes that have tobacco products such as cigarettes that are harmful to health, consumption taxes should also be levied to achieve the goal of "prohibiting e-cigarettes from taxation".