Possible UK Vape Tax & Industry Responses

I have seen various mentions of the possibility of a UK Vape Tax on vaping products.

The UK Chancellor will release his Spring Budget on Wednesday 6th March 2024 – will vaping be subject to a tax?

According to many publications this will likely be the case.

The budget is where the Chancellor of the Exchequer (Jeremy Hunt) reveals the financial planning for the UK. Usual areas discussed include taxation, spending commitments and benefits.

As the UK officially went into a recession at the end of 2023 there are expected to be many measures to try and grow the UK financial situation.

There have been rumours of income tax and national insurance cuts plus additional taxes on tobacco and vaping products. As it stands vaping products are subject to the usual rate of VAT – however it is proposed that an additional tax will be added.

In the Autumn budget of 2023, the price of rolling tobacco was increased by 12% and other tobacco products rose by 2%.

As the Government have been hard on vaping with the recent Disposable Vape Ban announcement, it is expected that e-liquid will be taxed (Vaping Products Levy). This is to raise the price so that underage vapers would struggle to afford it.

The taxation is reported to be based on the nicotine strength of the e-liquid. Higher nicotine strengths = higher taxation.

This seems such a shame. The people who mainly use the higher nicotine strengths are those transitioning from tobacco to vaping. The lower cost of vaping can be a huge incentive for those who smoke to quit.

Apparently there will also be an increase to the taxation on tobacco – which could still help vaping look like the less expensive option.

Obviously this is all conjecture at this point – this will not be confirmed until the Chancellor publishes his Budget Statement.

Below are some of the responses from industry and advocacy groups to the proposals.

NNA Response
Rumours of a vape tax in the budget are more evidence the government is unravelling its world- leading harm reduction strategy which will cost lives.

Created: 04 March 2024

It has been widely trailed in the media that the Chancellor, Jeremy Hunt, is planning to implement an extra tax on vaping liquids in the budget on Wednesday. This would be a monumental mistake which just adds to a systematic dismantling of the government’s previous world-leading approach to harm reduction and will cost lives.

The New Nicotine Alliance is disappointed that the government is abandoning opportunity after opportunity to increase the chances of achieving its own Smoke-free 2030 goal. In just a few short weeks, the UK government has undone its former position as a world-leader in reducing the prevalence of smoking.

Ignoring expert public health organisations such as Action on Smoking and Health, the National Centre for Smoking Cessation and Training, Fresh-Balance and many others who were acutely aware of the unintended consequences of a ban on single use vapes, the government has committed to removing them which can only deter people who smoke from switching to products which could save their lives.

It is also intending to restrict many flavours which can help people quit smoking, enforce plain packaging, and severely reduce the visibility of life-saving products.

In the terms of the proposed generational ban on tobacco products, it has included heat-not-burn products which are far less harmful than combustible tobacco – according to the government commissioned Committee on Toxicology report – and have led to dramatic declines in smoking prevalence in countries where they are widely available and promoted to people who smoke as an alternative.

It is also regrettable that the government has not taken the opportunity of Brexit to legalise snus which has led to Sweden being close to achieving the EU’s target of less than 5% smoking prevalence by 2040 nearly two decades early. Worse still, there are signs that the UK is now set to apply damaging restrictions to nicotine pouches which threaten to neuter their potential to attract people who use lethal combustible tobacco to a far safer alternative with comparably negligible harm.

These mistakes are serious enough, but the suggested vape tax would be the most pernicious of all.

Vaping products compete with combustible tobacco, so it is an economic certainty that any action which deters adult smokers from switching to a reduced risk alternative will be an increase in smoking. It will also increase the already high level of illicit trade in vapes which has been assessed currently to be around half of all sales in the UK.

Complying with government duties is not a simple matter, either. It will be a new and excessive burden on small independent companies to learn tax bureaucracy compliance, one which could put many out of business altogether, whereas the tobacco industry is well-versed on handling taxes over many decades.

Michael Pesko, probably the world’s most accomplished economist when it comes to applying quasi-experimental techniques to e-cigarette policies, strongly recommended against taxes on vaping products in his submission to the Department of Health and Social Care consultation. The government would be wise to take his advice seriously.

The government – and media reporting on the vape tax proposal – should ask questions on the inevitable unintended consequences of such a policy.

How much extra smoking do you expect to arise from taxing vapes? To what extent will this slow progress towards and imperil the Smokefree 2030 goal?

How much extra illicit trade in vapes do you expect to arise on top of the high level we already have?

How much extra tax bureaucracy cost do you expect to create compared to the tax revenue raised?

Big tobacco companies are set up for tax bureaucracy, what extent do these taxes penalise small vape businesses and support Big Tobacco?

If the rumours of a vape liquid tax are true, the government would be fighting itself. It has been recently reported that 400,000 vaping products – the first of one million promised by the government last year – will be handed out free of charge under the Swap to Stop campaign. The Chancellor taxing them on the pretext that they are harmful will surely cancel out much of that investment by sending mixed messages.

The government’s own consultation document in October stated that “swapping to vaping is already helping 50,000 to 70,000 smokers in England quit each year – saving thousands of lives.” This tax will be a significant obstruction to that progress.

Just last week, a long-running Cancer Research UK funded study found that there were “substantial misperceptions about the harms of vaping compared with smoking” and emphasised “the need to clearly communicate the risks so that adults who smoke can make informed choices about the nicotine products they use.” The rumoured tax on vaping liquids will only add to these damaging misperceptions.

The NNA hopes that wise voices are advising the Chancellor of the extremely damaging consequences that a tax on vaping liquid will have for public health, and that he draws back from announcing the proposal on Wednesday. Thousands of lives depend on it.

Mark Oates (Director of consumer group We Vape)
“These results come as no surprise following the relentless attacks on vaping by government, despite the fact the NHS hands out starter kits to smokers. We have lost sight of the fact Smoking kills around 70,000 Brits a year while vaping has proven to be vastly safer, contains no tar and is smoke free. The disposables ban and relentless verbal assaults on a product that is saving millions of lives around the world has led to a thoroughly misinformed public and millions of smokers facing a premature death because they believe there is no benefit from switching from cigarettes to vapes. Government must educate doctors and health care professionals on the benefits of making the switch if it stands any chance of achieving a smoke free England within a decade of its 2030 target.”

UKVIA Response
Taxing Vaping Is An Attack On Those Trying To Quit Smoking

February 27, 2024

John Dunne, Director General of UKVIA, said:

“Vaping is proven to be the most effective way for smokers to quit and in doing so helps drastically reduce the cost of care the NHS provides to smokers.
“It makes absolutely no sense to make it more difficult for adults to stop smoking by penalising those who choose a safer and healthier option in vaping. Smoking kills 250 people every day in the UK and according to Action on Smoking and Health costs the UK £17bn a year. A Centre for Economics and Business Research (Cebr) report in 2022 found that smokers switching to vaping saved the NHS £322m, a figure that was estimated to more than double if 50% of UK smokers made the switch to vapes.

“Surely we should be doing everything we can to help smokers escape a habit that kills so many. Increasing taxes on vaping will make vapes less accessible for the most disadvantaged in society who have the highest smoking rates and are most in need of an effective tool to quit.

“The Government continue to hide their heads in the sand, while taking actions that will fuel a black market which is already in danger of being out of control. Restricting access to vapes will not only mean more smokers, it will also mean more illegal and unregulated vapes. We need the Government to license vape retailers and properly enforce the law against youth access before it is too late.”

WVA Response
The World Vapers’ Alliance (WVA) have published the following press release – which I have copied and pasted below.

Press Release

For Immediate Release

The UK Risks Becoming a Harm Reduction Country Only for the Wealthy
London, 27.02.2024 – In a recent controversial move, the UK government, led by Prime Minister Rishi Sunak, is reportedly planning to impose increased taxation on vaping products alongside traditional cigarettes. This leaked plan has sparked significant concern among UK consumers, as it threatens to undermine the nation’s progress in harm reduction and smoking cessation efforts.

Michael Landl, Director of the World Vapers’ Alliance, expressed grave concerns regarding the government’s direction:

“It appears that in a bid to generate additional tax revenue, the UK government is willing to compromise the health of thousands of smokers. This is yet another step in the wrong direction. By making less harmful alternatives to smoking more expensive, the government is effectively deterring smokers from making the switch. This measure will disproportionately affect the less affluent and exacerbate health inequalities, especially during a cost of living crisis.”

Statistical evidence supports the disproportionate impact of smoking on lower socio-economic groups. In 2021, the Office for National Statistics highlighted a stark disparity in smoking prevalence related to economic status in the UK. Unemployed individuals reported a significantly higher smoking rate (25.7%) compared to those in paid employment (13.3%). Furthermore, in England, a pronounced smoking prevalence was observed in the most deprived neighbourhoods (23.8%) in contrast to the least deprived (6.8%).

Landl further criticised the government’s proposed bans on disposable vapes and generational restrictions on Heat-Not-Burn products, stating,

“Along with the proposed tax increases, these bans will only serve to transform the UK from a leader in tobacco harm reduction into a haven for black market activities.”

The World Vapers’ Alliance urges the UK government to reconsider these measures, advocating for a balanced approach that prioritises public health and supports smokers in transitioning to less harmful alternatives.