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UK Government Plans to Tax E-Liquids

Sources inside the British government have leaked plans to increase the existing tax on e-liquids. Providing the proposed levy goes ahead, it is estimated to net around £40 million. The exact increase is unclear, with sources saying it is anywhere from 5-25%. Even a 5% tax increase will create £40 million in revenue. 

The funds will contribute to the NHS and start chipping away at the £20 billion the Treasury promised1T. Helm, “May to unveil £20bn a year boost to NHS spending,” The Guardian, Jun. 16, 2018. [Online]. Available: https://www.theguardian.com/society/2018/jun/16/may-to-unveil-20-billion-pound-a-year-nhs-boost/ in 2018. Media outlets have criticized the “Treasury bean-counters” behind the plan, highlighting the absurdity of heavily taxing something that is widely considered to be a healthier alternative to traditional cigarettes. 

The idea that banning – or even just taxing – e-cigarettes will reduce the strain on the NHS has faced backlash. UKVIA, a non-profit that advocates for e-cigarettes in the UK, opposes the new tax. “Imposing a “sin tax” on vaping is counterintuitive to the government’s mission to reduce smokers in the UK and lessen the burden for the NHS,”2UKVIA team, “UKVIA opposes a vaping ‘sin’ tax on vaping,” UKVIA, [Online]. Available: https://www.ukvia.co.uk/ukvia-opposes-a-vaping-sin-tax-on-vaping/ said a spokesperson. 

In an open letter to the Treasury, UKVIA outlined its concerns around the so-called “sin tax”. According to UKVIA, figures “suggest that vaping has already saved the NHS and society as a whole millions of pounds.” 

This argument has also gained traction in the U.S. Last year, a paper from the National Bureau of Economic Research (NBER) suggested that doubling the rate of state and local e-cigarette taxes would only reduce youth vaping by a small amount3“Intended and Unintended Effects of E-cigarette Taxes on Youth Tobacco Use,” National Bureau of Economic Research, Working Paper No. 29216, Sep. 2021, Revised Oct. 2022. [Online]. Available: https://www.nber.org/papers/w29216/, just marginally more than it would increase youth smoking. Given the consensus that smoking is more harmful than vaping, the paper concludes that “the unintended effects of ENDS taxation may considerably undercut or even outweigh any public health gains.” 

We can assume that the new levy is designed to deter young people from using e-cigarettes. It follows on from an eight-week consultation on smoking and vaping4“Government sets out next steps to create smokefree generation,” GOV.UK, [Online]. Available: https://www.gov.uk/government/news/government-sets-out-next-steps-to-create-smokefree-generation/, which the UK government launched on October 12, 2023. It encouraged “anyone, of any age” to share their thoughts and “help shape future policy on vaping and smoking.” 

The consultation was part of the “smoke-free generation” law, which proposed increasing the age of buying e-cigarettes every year. If it goes ahead, young people in the UK who are currently 14 or younger will never legally purchase e-cigarettes. 

A national vape tax is nothing new. Italy became the first country to tax e-liquids in 2014, followed by Portugal, Sweden, Ukraine, and Germany. Italy imposed a £1.10 levy on 10ml bottles of e-liquid, but other countries were far harsher. Germany made headlines for planning to almost double the existing £1.40 levy on 10ml bottles of e-liquid to £2.60 by 2026. 

In the U.S., there is no federal tax on vaping products. However, 31 states and numerous local districts have implemented their own e-liquid taxes. 

The escalating concerns over youth uptake of e-cigarettes suggest that we might see a federal tax soon. Only time will tell how governments across the globe will react to the rising tensions around e-cigarettes.

Sources

Viki Howlett
Viki Howlett
Viki Howlett, a skilled writer with a decade of vaping experience, enriches our website with engaging, well-researched articles, offering readers valuable insights and trustworthy reviews on vaping products and trends.
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