During his Spring 2024 budget announcement, Finance Minister Jeremy Hunt revealed plans to introduce a new tax on vaping. Currently, vapers in the UK already pay 20% VAT on e-liquids. Hunt’s proposal seeks to add another £1 per 10mL to nicotine-free e-liquid, £2 per 10mL to e-liquids containing 0.1-10.9mg/mL of nicotine, and £3 per 10mL to e-liquids containing 11mg/mL or more nicotine.
Now, vapers in the UK pay £5 for a 10mL bottle of e-liquid with 18mg/mL of nicotine. The proposed tax will add £3 to the existing £1 VAT charge, for a total of £9 and a tax rate of 44%. Pro-vape campaigners worry that this massive leap will stop smokers from accessing e-cigarettes, which are widely considered to be a healthier alternative to cigarettes.
The proposed tax follows in the footsteps of European countries such as Germany and Italy, which already tax 10mL of e-liquid by as much as €1.60. The UK’s plan to tax e-liquids was first leaked in March, a few months after the “smoke-free generation” proposal and a public consultation that voted in its favor.
According to Hunt, the proposed tax will “discourage non-smokers from taking up vaping” 1“Spring Budget 2024 speech,” GOV.UK, Mar. 06, 2024. https://www.gov.uk/government/speeches/spring-budget-2024-speechand raise funds to offset the 2% cut in National Insurance also introduced during the Spring Budget announcement.
The decision has been met with harsh criticism from UK retailers and campaign groups. Simon Clark, Director of the smokers’ lobby group Forest, said that the tax is “stupid, short-sighted, and potentially counter-productive”2Twitter, X, @Forest_Smoking, https://twitter.com/Forest_Smoking/status/1765406177431540101, alluding to the fact that vapers may switch to smoking to avoid the tax.
The research is divided. One survey of young people in America found that “increased e-cigarette prices and taxes were associated with significant reductions in the past 30-day use.”3M. C. Diaz, E. C. Kierstead, B. S. Khatib, B. A. Schillo, and J. A. Tauras, “Investigating the Impact of E-Cigarette Price and Tax on E-Cigarette Use Behavior,” American Journal of Preventive Medicine, vol. 0, no. 0, Feb. 2023, doi: https://doi.org/10.1016/j.amepre.2023.01.015 Another found that “e-cigarette price changes may disproportionately affect pre-filled users and recent quitters.”4H. Minami and T. K. Teo, “The impact of e-cigarette price changes on vaping and smoking behaviors,” Substance Use & Misuse, vol. 54, no. 10, pp. 1599–1610, May 2019, doi: https://doi.org/10.1080/10826084.2019.1592195
In an attempt to avoid this problem entirely, the UK government will also introduce a one-off increase in tobacco duty during the same timeframe to “maintain the financial incentive to choose vaping over smoking.”
Regardless of how thoroughly the government has anticipated the dilemma, some critics are still not pleased. Doug Mutter, Director of the eCommerce e-cigarette site VPZ, said, “The idea of raising tobacco duty to encourage more smokers to switch, whilst at the same time introducing a punitive vaping tax, is fundamentally flawed and will only punish people looking to quit smoking.”5J. Jones, “Spring Budget 2024: Hunt confirms vaping tax and one-off tobacco duty hike to fund NI cut,” CityAM, Mar. 06, 2024. https://www.cityam.com/spring-budget-2024-hunt-confirms-vaping-tax-and-one-off-tobacco-duty-hike-to-fund-ni-cut/
Tadeu Marroco, Chief Executive of British American Tobacco, is one of the few key figures who welcomes the tax. Speaking to the Financial Times, Marocco said, “A lot of people confuse that we are an industry that hates regulation, but that’s exactly the opposite; we love regulation.”6“British American Tobacco chief embraces new UK vape tax,” www.ft.com. https://www.ft.com/content/2e5b6634-e09c-46fb-978c-dae56b684a06
The potential 44% tax marks a significant shift in the ever-changing landscape of vape regulations, leaving many British vapers wondering whether there will be more extreme measures in the future. When the public consultation commences, we expect to see many more criticisms of the government’s overall plan, especially regarding the one-off tobacco tax.
