May 18, 2018 / 4:02 PM / 5 months ago

Government proposal leaves markets gasping -- and Italians vaping

ROME (Reuters) - While Italy’s 5-Star Movement and League party left financial markets gasping on Friday with promises to raise government spending dramatically, users and producers of electronic cigarettes were breathing more easily.

FILE PHOTO: E-cigarettes are displayed in a shop in downtown Rome, Italy February 27, 2015. REUTERS/Tony Gentile/File Photo

The parties’ 57-page “contract”, which is supposed to underpin a new coalition government, includes two lines promising to lower levies on smokeless cigarettes to the benefit of Italy’s 2 million e-smokers, and a business worth 350 million euros ($400 million) a year.

FILE PHOTO: Northern League's leader Matteo Salvini smokes a cigarette during an electoral rally in Palermo, Italy February 14, 2018. REUTERS/Guglielmo Mangiapane/File Photo

“Out with the tax on electronic cigarettes!” League leader Matteo Salvini said earlier this week in a video streamed on Facebook, before the program had been finalised.

Salvini recently gave up smoking regular cigarettes, though he also has complained that he should not have tried to quit during the stressful government negotiations.

Current taxation has doubled the cost of liquid refills for so-called vape pens to as much as 9 euros, an industry source told Reuters.

FILE PHOTO: E-cigarettes are displayed in a shop in downtown Rome, Italy February 27, 2015. REUTERS/Tony Gentile/File Photo

“The League listened to us,” said Gianluca Giorgetti, a supporter of the far-right party who owns Svapoart, a producer of liquids for electronic cigarettes. “Now this unjust tax must be eliminated.”

The euro, bonds and stocks all tumbled due to investors’ fears the contract will set Italy on a spending binge, increasing its already enormous debt pile and putting it on a collision course with European Union fiscal rules.

A new government could be finally take power next week after almost two months of stalemate following inconclusive elections.

The global science community is divided over e-cigarettes and whether or not they are a useful public health tool as a nicotine replacement therapy.

Writing by Steve Scherer; editing by David Stamp

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