Polish E-Cigarette Liquid Prices to Skyrocket, Threatening Legal Market

Polish e-cigarette manufacturers are bracing for a storm as the government prepares to slap a hefty 75% excise tax on e-liquids. This dramatic increase, set to take effect next year, could push the cost of e-liquids above traditional cigarettes, prompting fears of a surge in the black market and severe consequences for the domestic industry.

• Also Read: Poland Proposes 40 PLN Fee on All Vaping Devices

"When we're shutting down our businesses, the black market will be popping champagne," warns Przemysław Jaskóła, a board member of Fusion Labs. Manufacturers argue that the sudden and substantial tax hike will create a level playing field for illicit products, while legal businesses struggle to survive.

The government's decision to target e-liquids with such a steep tax increase has caught the industry off guard. Critics argue that the move is shortsighted and could undermine efforts to reduce smoking rates. By making e-cigarettes less affordable, the government may be driving former smokers back to traditional cigarettes, which are linked to a higher risk of health problems.

"This is a reckless gamble," says Łukasz Kozłowski, chief economist at the Federation of Polish Entrepreneurs. "Instead of promoting healthier alternatives, the government is creating a situation where people are more likely to buy illegal products."

The sharp increase in taxes is expected to have a devastating impact on small and medium-sized enterprises (SMEs) that dominate the Polish e-cigarette market. Many businesses may be forced to lay off workers or shut down altogether. Additionally, the higher prices could drive consumers to seek out cheaper, unregulated products from the black market.

The industry argues that the government's approach is fundamentally flawed.

"The planned excise tax hikes essentially penalize the least harmful alternative to traditional cigarettes," emphasizes Jaskóła. "It's illogical to impose the heaviest burden on e-liquids while leaving traditional cigarettes with a relatively modest tax increase."

Furthermore, the industry warns that the drastic tax hikes will inevitably fuel the growth of the black market. E-liquids are relatively easy to counterfeit and distribute illegally. "Consumers will simply turn to the black market where they can find cheaper, untested products," Jaskóła explains. "This not only undermines the government's revenue goals but also poses significant health risks to consumers."

The black market for e-liquids is already a significant concern. Estimates suggest that it currently accounts for up to 50% of the market, resulting in substantial revenue losses for the government. The proposed tax increases are likely to exacerbate this problem, further eroding tax revenues and undermining the legitimacy of the legal market.

"The government's own projections on tax revenue are overly optimistic," warns Dr. Sławomir Dudek, President of the Institute of Public Finance. "If the black market expands as expected, the actual tax revenue may fall short of projections."

The abrupt nature of the tax increase has also drawn criticism from industry stakeholders. The government's decision to deviate from the previously agreed-upon "excise duty map" has created uncertainty and instability for businesses. This lack of predictability makes it difficult for companies to plan for the future and invest in growth.

"The government's lack of consultation and the sudden change in policy are deeply concerning," says Kozłowski. "This undermines the trust between the government and businesses, and it will discourage investment and innovation in the sector."

The Polish government's decision to significantly increase taxes on e-liquids has sparked a fierce debate. While the government aims to increase revenue and potentially discourage vaping, the industry warns of unintended consequences, including a thriving black market, job losses, and a potential resurgence in traditional smoking. The coming months will reveal the true impact of these policy changes on the Polish e-cigarette market and public health.