The government's spring budget paper details the present proposal in full, albeit the tax will be the subject of a public consultation, as reported by The Mirror. According to the budget, the tax will be £1 on every 10 milliliters of e-liquid with no nicotine, £2/10 ml for e-liquids with nicotine concentrations between 0.1 and 10.9 mg/ml, and £3/10 ml for goods containing e-liquid with nicotine concentrations of 11 mg/ml or above.
Like most consumer goods, vapes are now liable to a 20 percent value added tax (VAT, a sales tax). The 20 percent VAT will be added to the new tax.
A customer purchasing a 10 mL bottle (the highest permitted quantity) of e-liquid with an 18 mg/mL nicotine intensity for £5 would thus have to pay an extra £3 in tax on top of the £1 in VAT, making the total cost of £9 (about $11.45 USD)—a total tax rate of 44%.
The UK is "systematically dismantling world-leading policy," according to NNA.
Tobacco control organizations and British American Tobacco, whose cigarettes and Vuse vapes are losing share of the market to disposable vapes, applauded the move. Tadeu Marroco, CEO of BAT, said to the Financial Times that his organization "loves regulation."
"Exasperated that the government is methodically dismantling world-leading policy which was an example to the remainder of the world on how to utilize innovative methods for harm reduction to rapidly reduce the toll of smoking-related disease," stated a statement from the New Nicotine Alliance (NNA), a group that advocates for nicotine users.
In January, rumors circulated that the government intended to tax vapes. A public consultation was held after the government's announcement in October of its intention to propose a legislation titled "smokefree generation," and one of the possible measures included in the consultation was a tax.
Taxes and Regulations on Vaping
Prime Minister Rishi Sunak said at the end of January that the government plans to implement regulations on "plain packaging," limit the flavors that may be found in vapes, prohibit disposable vapes, control how vapes are exhibited in retailers, and advance its generational tobacco ban. Additionally, according to Sunak, vapes without nicotine will now be subject to the same laws as those governing vapes with nicotine for the first time.
Almost fifty nations impose some kind of vape tax. Most have a tax based on the wholesale cost of goods or have an e-liquid tex per milliliter, similar to the proposed UK tax. The United States does not have a federal tax; but, 31 states, Washington, D.C., and Puerto Rico does.
Taxes on vaping products have been shown to encourage smoking and cigarette sales. Because vapes & cigarettes are economic equivalents, policies that penalize one—such as taxes and taste bans—increase the sales and use of the other, especially among youth.
