Great Britain plans to increase taxes on e-cigarettes and tobacco

The plan to increase taxation on vaping products pleases both health stakeholders and tobacco manufacturers for different reasons. The former see it as a way to reduce the availability of electronic cigarettes for young people, the latter see it as a way to limit local and Chinese competition.

After re-launching its anti-tobacco plan to achieve a tobacco-free generation by 2030, the UK government is now looking at vaping products. The main reason is the sharp increase in the consumption of e-cigarettes among young people. Among 11-17 year olds, experimenting with vaping actually increased from 15.8% in 2022 to just over 20% in 2023.

Taxation proportional to nicotine content

Along with plans to ban single-use electronic cigarettes (“vaping”), the government has confirmed its intention to halt this progress by significantly increasing taxation on vaping products. E-liquids should be taxed according to their nicotine concentration: £2 (€2.34) per 10ml e-liquid for cigarette content, £3 (€3.51) per 10ml for e-liquid exceeds this content. Nicotine-free e-cigarettes should be taxed at £1 (€1.17) per 10ml of e-liquid. However, this new tax would not come into effect until October 2026, after a consultation period. Taxation on tobacco products should also increase at the end of 2026 to maintain the significant price difference between these products and vaping.

There has been a significant rise in tobacco tax in the UK, with the latest taking place in November 2023, and it has now brought a pack of cigarettes to £16 (or €18). For the first time since their introduction to the market about ten years ago, vaping products will also see changes in their taxation. Since teenagers and young adults are very sensitive to the price dimension, this measure is clearly intended to discourage them from vaping the products, a method that has proven to be successful with tobacco products.

Deborah Arnott, director of Action on Smoking and Health (ASH UK), reckons this tax will help stop it “A Tsunami of Illegal E-Cigarettes Floods the Market”(1). He believes that the price of e-cigarettes should remain lower than the price of tobacco products in order to motivate smokers to stop using vaping products.

The vaping industry is to blame

John Dunne, chief executive of the UK Vaping Industry Association (UKVIA), lamented the reversal and expressed concern for less fortunate vapers – one of the arguments tobacco companies usually use to oppose price increases.

The announcement of this tax increase led to a drop in the stock price of independent e-cigarette manufacturers, as well as Supreme (-15%), which manufactures the 88Vape brand and distributes flagship vape brands. Chinese ElfBar and Lost Mary. It also affected the price of Imperial Brands (-6%), the UK tobacco market leader.

A possible benefit for tobacco companies

The CEO of British American Tobacco, Tadeu Marroco, was in favor of the plan to tax vaping products and joked about it when he said he liked the regulation (“We love regulations”)(2) while this MNC accumulates offenses and convictions with respect to regulations.

Tobacco manufacturers, used to a highly regulated tobacco market where a small number of players facilitate business deals between competitors, are trying to push their cartridge-based (“pod”) e-cigarettes into the currently under-regulated vaping market. According to Reuters, the UK tax plan would make it easier for tobacco companies to absorb these increases by keeping the prices of vaping products low, making it more difficult for local small producers (3). In addition, the tightening of regulations for vaping products should primarily affect cheap disposable electronic cigarettes from Chinese manufacturers, i.e. all factors that could limit economic competition.

Keywords: United Kingdom, taxes, vaping products, UK Vaping Industry Association, Imperial Brands, British American Tobacco

©Tobacco Free Generation

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(1) Ralph A, What will the vaping tax in the budget mean for the tobacco industry?The Times, published 3 March 2024, accessed 6 March 2024.

(2) Barnes O, Gross A, The boss of British American Tobacco has welcomed the UK’s new vape taxThe Financial Times, published on 6 March 2024, consulted on the same day.

(3) Young S, Rumney E, Britain is planning a new tax on vaping from 2026Reuters, published 6 March 2024, accessed 7 March 2024.

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