The government of Donald Tusk is striking blindly at American businesses. In a desperate bid to patch up the budget – and under pressure from lobbyists – it is draining key enterprises of Poland’s most important global ally through aggressive taxation. After targeting digital giants, who may face a special levy starting next year, the government has now set its sights on the largest American investor in Poland’s tobacco sector. The Ministry of Finance plans to triple-tax Philip Morris’s new vapor device.
As of September 1, all disposable e-cigarettes (virtually all of which come from China) are subject to an additional excise tax of 40 PLN. Introduced by the Ministry of Finance, this tax was a lifeline thrown to the now-former Health Minister Izabela Leszczyna, who failed to stem the tide of sweet, disposable vapes made in China. Over 90% of all e-cigarettes worldwide originate from China. According to the Ministry of Health itself, these products are widely used by children and teenagers. More than half of Polish high school students admit to “vaping,” citing sweet flavors as the main draw.
The Ministry of Finance appeared to find a Solomonic solution: it imposed a 40 PLN excise tax on all nicotine vaporizing devices, including reusable e-cigarettes and tobacco heaters. The goal was to curb the rampant e-cigarette market in Poland, dominated by Chinese manufacturers. As of September 1, the sweet puff of a vape has simply become too expensive for kids.
Ironically, while China has banned fruity e-cigarettes at home, it floods Western markets with them. The U.S. is their primary target. Natalie Winters, a leading White House correspondent, recently reported that American authorities seized over 600,000 Chinese e-cigarettes in a single week.
“China is killing Americans with fentanyl and poisoning us with vapes”, Winters warned on X.
Polish distributors of Chinese e-cigarettes quickly adapted to the new regulations. They began importing new versions of disposable vapes from China – specifically designed to bypass the Polish government’s new rules.
What are Chinese manufacturers doing? They’re disassembling e-cigarettes into individual components. Since the new law imposes the 40 PLN tax on a “set of parts,” clever Chinese producers now sell the components separately. Consumers can now buy a Chinese coil, battery, and liquid tank individually – no extra tax, no contribution to the Polish budget.
While tax authorities were being outmaneuvered by manufacturers, e-cigarette lobbyists played their own game. They shifted the blame for regulatory failure onto the American company Philip Morris International. The U.S. giant introduced a new reusable e-cigarette in Poland and has been paying the 40 PLN excise tax on both the device and the liquid from the start. But lobbyists representing Chinese firms weren’t satisfied. They demanded that the company pay 40 PLN not only for each device but also for each tank that comes with it – effectively doubling the tax.
Meanwhile, Chinese companies continue selling their products in parts, tax-free.
All it took was a public accusation from the so-called Vaping Industry Employers’ Association (Polish: Związek Pracodawców Branży Vapingowej, ZPBV) – an interest group representing Chinese distributors – claiming that the new Philip Morris device was skirting the law. The Ministry of Finance, led by Andrzej Domański, panicked. Fearing accusations of favoritism toward Americans, it sided with the Chinese. This, despite the fact that Philip Morris had already received confirmation from the National Revenue Information Office that its product fully complied with the new regulations.
Now, the Ministry of Finance is planning to reopen the law – specifically to impose a double tax (2 × 40 PLN) on the American product. This would be an unprecedented move in the e-cigarette market: reopening legislation just to double-tax a single company’s product, which would eventually face a triple tax overall.
Parliament is expected to take up the new regulations by year’s end. The question remains: will the Ministry also address the illegal practices of Chinese manufacturers, whose ingenuity knows no bounds? Some now offer refillable tanks with valves, allowing consumers to top up their vapes indefinitely – while the company pays the 40 PLN tax only once.
American companies and their investments are an added layer of security for Poland. It hardly needs stating that the U.S. Army also protects America’s economic interests and foreign investments. The Tusk government now faces a choice: will it support companies from China or from the United States? And is it prepared to face the legal consequences? After all, American investments in Poland are protected by the 1990 Treaty on Business and Economic Relations, in which the Republic of Poland pledged to ensure, quote: “fair and equitable treatment of investments and commercial activity” in tax matters.