Tobacco companies are not against the conduct of the excise tax on the innovative tobacco products.

At the same time, the company believes that excise duty on products should be lower than on the traditional cigarettes.

Participants of the Russian tobacco market are not against the introduction of the excise tax on innovative tobacco products, but they believe that the excise duty on them should be lower than on the traditional cigarettes. This opinion was expressed by the interviewed representatives of major tobacco companies, some of which are already producing such products.

Earlier on Thursday, a source familiar with the discussion of the initiative, told that in Russia from 2017 the excise duty on tobacco smoking in electronic devices, such as iQOS, may be introduced. According to him, the issue was raised again in 2015, rates will be discussed, however, the excise tax itself could act in 2017

It is not the first time when the Russian authorities say about the possibility of introducing excise duties not only on traditional but also alternative products for smoking. Earlier, in April 2016, Deputy Finance Minister Ilya Trunin reportedthat the Finance Ministry ponders the possibility of the introduction of excise duty on electronic cigarettes. According to him, in electronic cigarettes a subject for the excise would be the liquid inside this product. The Deputy Minister stated that he considered it strange that conventional cigarettes are a subject to excise duty and the electronic cigarettes- no.

Opinion of the industry

Tobacco companies generally supportive the similar logic, but believe that the specific tax should be used for innovative products.

“The market for innovative products, alternative traditional cigarettes, develops, and the certainty is undoubtedly important. Electric heating system iQOS tobacco – potentially less harmful alternative adult smokers, “- told the Vice-President of Corporate Affairs affiliated companies Philip Morris International in Russia Sergei Slipchenko. In his opinion, this fact should be taken into account when shaping the approach of the taxation of tobacco sticks (cartridges), used with iQOS.

Vice-President of “JTI Russia” Corporate Affairs and Communications Sergey Kiselev said that the company understands the government’s interest in the taxation of e-cigarettes. “At the same time, we believe that the level of such taxation shall be reasonable and clearly defined tax base. We support the specific tax structure, tax calculations on the basis of the physical volume of liquid containing nicotine “, – he said. At the same time, Kiselev considers reasonable the introduction of taxation of heating smoking devices. “As the heated tobacco, it would be logical that such tobacco products are also subject to the excise tax,” – he said. According to him, JTI is in favour of the use of specific tax, the calculation of the basis is the weight of the tobacco cut filler (mixture).

As stressed Kiselev, a specific level of taxation in both cases should be determined taking into account the need to ensure the effectiveness of tax revenue in the long term. Given the small market share, the current setting of the excessively high rates of excise duty is able to slow down the further development of this category and as a result does not meet the expectations of the state tax collections, he said.

Director of Corporate Affairs “BAT Russia” Alexander Lutyi, in his turn, told that the regulation of the market of electronic cigarettes and all sorts of other nicotine-containing devices generally should not interfere with the development and sales of products that could potentially carry a lower risk for smokers.

The device for heating iQOS tobacco was developed by Philip Morris International. The technology – a process of heating the tobacco without burning, resulting in a “tobacco pairs” (aerosol). Unlike electronic cigarette, running on a special liquid, iQOS can be used only with special cartridges, which contain specially treated tobacco. iQOS cost in Russia is 7 thousand RUB. Other tobacco companies do not sell now similar products in the Russian Federation.

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