May 18, 2018 / 4:03 PM / a month 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.

“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.

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

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.

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

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.

“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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