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In this week’s Budget (March 6th), the government is planning on introducing a new vape tax. Ministers fear that the relatively cheap cost of vaping means that the products are more accessible for young people and non-smokers. To ensure that vaping remains cheaper, they may also increase the tobacco duty.

It comes after the consultation last year, where plans were announced of a UK-wide ban on disposable vapes, alongside restrictions on flavours and packaging. Prime Minister, Rishi Sunak aims to prevent young children from taking up vaping and to encourage current adults smokers to switch to e-cigarettes.

“Increases in the price of tobacco has helped reduce the number of young children smoking, so we know this type of policy is effective. However, we are mindful of the need to balance a price increase that deters young people vaping with ensuring that vaping remains a more affordable option than smoking, to encourage adult smokers to quit.”

UK government ministers are hopeful for relevant legislation regarding the ban to pass before the next election.

According to The Times, the new duty will be imposed on the liquid in vapes, with higher tax rates for products with higher levels of nicotine.

Treasury analysis suggests that the new vaping tax, along with the rise in tobacco duty, could eventually raise around £500m a year by the 2028/29 tax year, alongside official economic forecasts predicting tobacco duty will raise £10.4bn this year, driven by the higher rate.

Under the government’s “swap to stop” scheme in England, traditional smokers can get free vaping “starter packs” to help them quit tobacco and improve the health of the nation.

How Will the Vape Tax Effect Cost?

Although the exact cost is currently unknown, it is expected that Chancellor Jeremy Hunt will aim to parallel the success of similar tax-increase initiatives within Europe. Several European countries have already implemented vape taxes, including Italy which levies €1.30 and Germany which charges €1.60. The European Commission is planning to introduce a minimum level across the EU. Following comparison with the likes of Germany, figures estimate that retailers and customers should expect an extra charge of £1.40 for each 10ml bottle of E-liquid, increasing the average cost of a £4 bottle to £5.40.

Tax Concerns

The UK Vaping Industry Association (UKVIA) has concerns with the proposed vape levy. Director General, John Dunne said that increasing taxes on vaping will make vapes a “less accessible” alternative for people in poorer areas with the highest smoking rates and greatest need of a practical tool to quit. “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.

He argued that it makes no sense to “penalise” smokers that have made the healthier and safer option to switch to vaping. “Smoking kills 250 people every day in the UK” and according to Action on Smoking and Health (ASH), “costs the UK £17bn a year.”

A report carried out by Centre for Economics and Business Research (Cebr) in 2022 found that adults who have made the switch from traditional smoking to vaping saved the NHS £322m, which is estimated to double if 50% of UK smokers make the switch.

Dunne also fears that the decision “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.”