Tax on vaping is delivering less than half the “conservative” projections of the Department of Finance, new data reveals.
The new e-liquid products tax on vaping products came into effect at the start of November last year. Levied at a rate of €500 per litre, it applies to the first sale of the product in the State. Businesses are obliged to register and make returns to Revenue.
Returns for the first bimonthly period were due to be made by January 31st, but provisional data for the tax take shows that it was considerably lower than needed to hit the Department of Finance’s full-year €17 million estimate.
Returns made by 60 companies yielded just €1.3 million in tax over the first two months of the regime, Minister for Finance Simon Harris said in response to a parliamentary question. That is just 46 per cent of the €2.83 million pencilled in for each two-month period if the tax is to deliver on projected levels.
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The department’s Tax Strategy Group said in September that the €17 million projection was a “conservative estimate” of the potential full-year yield of the tax.
The projected tax yield was “purposely set at a lower level to avoid overestimating revenue in the initial stages of implementation of the tax”, it said, noting that the introduction of the excise tax could cause a shift in consumer behaviour.
However, in arriving at its estimate of tax yield, the Tax Strategy Group said it “has proven difficult” to establish the overall size of the e-cigarette market in Ireland, adding that there was a “lack of information” on the matter.
Harris noted that, following the commencement of the tax, details of settlements and offences regarding the charge will be included in Revenue’s quarterly publication of the tax defaulters.
Extrapolating from the provisional data, Responsible Vaping Ireland – a trade body for vaping product retailers – has warned that a large number of liable businesses may not be filing the required returns.
A spokesperson for the trade body said the use of a “self-declaration system for the vape tax is clearly not robust enough, if returns are at such a shockingly low level”.
It called on Harris to introduce tax stamps to allow for the measurement and enforcement of compliance with the tax.
Responsible Vaping Ireland called for a “clampdown on the black market” to “ensure that bad actors who are importing or selling illegal or unregulated vaping products are stopped”.
It said, however, that “any system is only as good as its enforcement and the lack of tax stamps and no formal tracking of the black market is a missed opportunity from Revenue to stop these rogue retailers”.
Responding to questions from The Irish Times, the Department of Finance stressed that the data supplied by Harris was provisional.
