Yesterday, Chancellor of the Exchequer, Rachel Reeves, announced amendments to the vape duty which was originally proposed by Jeremy Hunt in the spring budget that preceded the general election.
The NNA wrote at the time that Hunt’s plans were “wrong in principle and childlike in application.” They seemed to be rushed, were based on flawed reasoning, and relied on a fundamental lack of understanding of how vaping works to reduce smoking rates.
It was to be hoped that a new government would take time to consider the problems that would arise as a result and study the subject more seriously. However, the new government appears to be as ill-informed as the last and likely swayed more by tabloid rhetoric than sober, evidence-based research. The new government promised change, but little has changed for the better.
On the plus side, the government has commendably abandoned the three-tier approach to taxation which would financially disadvantage higher strength liquids most used by people switching from combustible cigarettes. It instead proposes a flat rate of tax, but that is where the common sense ends.
Cost of a 10ml and 100ml e-liquid bottle before and after applying tax
Once again, we have a government which rightly continues to promote supplying one million free vapes to smokers, only to then disincentivise those who take up the offer by applying heavy duties to the liquids they need to actually use them.
As in the previous version of the vape duty, there is no appreciation of the vast difference in risk between combustible tobacco and vaping products. The government’s response to the vape duty consultation, which took place before the election, was published to coincide with the budget announcement and makes the same mistake as many commentators in seeing nicotine as the problem, rather than combustion.
It states that the duty will “further disincentivise young people and non-smokers … who may switch to refillable products in response to the ban [on disposables]." Single use vapes were supposedly banned because of their impact on the environment, hence why the legislation was added to the Environmental Protection Act. Those who supported the ban argued that it was not a burdensome imposition because vapers could use refillable devices instead, but it is now clear that the Labour government sees all vaping as undesirable.
It is highly naive to expect all users of disposable vapes to simply quit use of nicotine. To aspire to that goal is extremely irresponsible. The tax to be imposed means it is now far more likely that the chosen alternative following the disposables ban will be cigarettes rather than more environmentally friendly alternatives to single use products.
The government seems oblivious to NHS guidance that “nicotine itself does not cause cancer, lung disease, heart disease or stroke and has been used safely for many years in medicines to help people stop smoking.” Cigarette use is so dramatically more harmful than vaping that it is beyond belief that the government would flirt with the possibility of people returning to smoking, or seeking nicotine from combustion instead, by actively discouraging other vaping options.
Commenting on the previous vape tax regime, we criticised the irrelevant obsession with calculating the nicotine in vapes and comparing it with nicotine in cigarettes. It should be obvious that it is a pointless exercise when one product is vastly more harmful than the other, not due to nicotine content but because of the effects of combustion. The calculation in Jeremy Hunt’s supporting documentation at least had the merit of explaining the reason for setting differential vape duty for varying strengths of liquid, however flawed it was.
It is even less understandable now that the proposal is for a flat tax but has led to this extraordinary table in the HMRC documentation behind the duty announcement.
There is no explanation as to how they have come to the assessment that 10ml/mg of vaping liquid equates to 100 cigarettes. It is plainly wrong, as Action on Smoking and Health explained in their briefing for local authorities on youth vaping in 2022.
“Disposable vapes DO NOT contain as much or more nicotine as a packet of 20 cigarettes. Comparing like with like, a UK standard 2 ml disposable vape contains 40 mg of nicotine, an average pack of 20 cigarettes contains 250 mg of nicotine which is more than six times as much.”
The ASH explanation refers to a single use vape containing 20mg/ml of nicotine. Therefore, a 10ml bottle at the same strength would contain 200mg of nicotine, which is around 16 cigarettes, nowhere near 100. Using this mythical justification, the government has significantly over-estimated the threat of vaping and/or under-estimated the risks of smoking.
Consequently, the level of taxation proposed for vaping liquid is fatally flawed. The Chancellor announced that there would be an equivalent increase of £2.20 per 100 cigarettes in tobacco duty to "maintain the financial incentive to switch from tobacco to vaping". It is nothing of the sort. The Chancellor has considerably reduced the financial differential between smoking and vaping
According to the Office of National Statistics, the average price of a pack of 20 cigarettes is £15.88, meaning the tobacco duty increase is 44p per pack, or 2.77%. The government’s own estimation of the increase in cost for vape liquid is 105% before VAT is included, more than doubling the cost of quitting smoking. It is more alarming still when you consider that low-income vapers can currently buy bottles for £1 from some stores, which would increase by 264%.
This is without factoring in the large increase in costs for vape liquid manufacturers to cope with tax regulations which they have not encountered before. The new proposals involve registering with the government and buying tax stamps to prove products have complied with regulations, at their own cost, which will surely raise retail prices before tax. It is worth noting that even cigarettes do not have to apply tax stamps in the UK.
As we explained in March, the only result of this will be a significant deterrent to smokers who are considering switching to vaping, an increase in sales of illicit products, and relapse by many back to smoking cigarettes.
This misguided attack on quitting smoking means only one thing, that the government’s Smokefree 2030 target is now nothing but a pipe dream.