During the Spring 2024 budget announcement, Finance Minister Jeremy Hunt unveiled plans for a new tax on vaping in the UK. While vapers currently face a 20% VAT on e-liquids, Hunt’s proposal aims to introduce additional charges, escalating the cost significantly.
Under the proposed tax structure, nicotine-free e-liquids would see a £1 per 10mL increase, while those containing 0.1-10.9mg/mL of nicotine would incur an additional £2 per 10mL. For e-liquids with 11mg/mL or more nicotine, the tax would spike by £3 per 10mL.
With this change, a 10mL bottle of e-liquid containing 18mg/mL of nicotine would leap from £5 to £9, reflecting a substantial 44% tax rate. Advocates for vaping express concerns that such a sharp increase could deter smokers from transitioning to e-cigarettes, widely acknowledged as a healthier alternative to traditional cigarettes.
The UK’s move to tax e-liquids follows the footsteps of other European nations like Germany and Italy, where levies on 10mL of e-liquid reach as high as €1.60. Reports of the UK’s intention to tax e-liquids surfaced shortly after the proposal for a “smoke-free generation,” gaining momentum following a public consultation.
According to Hunt, the proposed tax aims to dissuade non-smokers from taking up vaping while generating revenue to offset a 2% reduction in National Insurance introduced in the Spring Budget.
Criticism has been swift from UK retailers and campaign groups. Simon Clark, Director of the smokers’ advocacy group Forest, denounces the tax as “stupid, short-sighted, and potentially counter-productive,” suggesting that vapers may revert to smoking to avoid the hefty charges.
Research on the impact of vaping taxes remains inconclusive. While some studies link increased e-cigarette prices to reduced usage, others suggest that pricing changes may disproportionately affect certain user groups.
In a bid to address potential consequences, the UK government plans a one-off increase in tobacco duty concurrently, aiming to maintain the financial incentive for smokers to switch to vaping.
However, skeptics remain unconvinced. Doug Mutter, Director of eCommerce e-cigarette platform VPZ, criticizes the dual approach, asserting that it penalizes individuals seeking to quit smoking.
Amidst dissent, Tadeu Marroco, Chief Executive of British American Tobacco, welcomes the tax as a form of regulation beneficial to the industry, signaling varying perspectives within the sector.
The proposed 44% vape tax heralds a significant shift in vape regulation in the UK, prompting speculation about future measures. As public consultation commences, anticipation builds for further scrutiny, particularly concerning the one-off tobacco tax.
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