Key Aspects of the Proposed Tax
1. Flat-Rate Excise Tax on E-liquids
Announced in the recent Budget, the flat-rate tax will apply a £2.20 excise duty to every 10ml bottle of e-liquid, affecting both nicotine and non-nicotine products starting October 1, 2026. Additionally, prefilled pods (2ml) will incur an additional £0.44 duty.
2. Impact on Smokers and Lower-Income Vapers
Marcus Saxton, Chair of the IBVTA, highlighted the potential burden this tax could place on consumers, particularly those from lower-income backgrounds. Increased costs might discourage smokers from switching to vaping, driving some back to smoking or to potentially unsafe, unregulated products on the illicit market.
Concerns Over Abandoning the Tiered Tax Structure
The proposed flat tax replaces the previously considered tiered structure, which would have imposed variable tax rates based on product types and nicotine levels. Health organizations, such as Action on Smoking and Health (ASH), argued that the tiered approach risked disproportionately targeting higher-strength products that are often necessary for smoking cessation, potentially undermining public health goals. The flat-rate model is seen as a more straightforward approach, yet it still raises concerns about affordability and accessibility.
Government Consultation and Anti-Illicit Trade Measures
The government plans to open a public consultation, closing on December 11, 2024, to solicit feedback on compliance and regulatory changes. This consultation will include discussions on potential duty stamps for vaping products to prevent counterfeit goods, and further input will be sought on managing the supply chain and mitigating illicit production.
While the IBVTA welcomes the opportunity for industry consultation, Saxton emphasized the importance of designing regulations that do not undermine public health initiatives, especially those that use vaping as a smoking cessation tool within public health services.
Regulatory Context: Single-Use Vapes and Underage Access
The proposed tax comes amid broader regulatory scrutiny of vaping in the UK, including a likely ban on single-use vapes. Although single-use vapes have been an accessible starting point for smokers transitioning to vaping, they have also raised concerns about youth access and environmental impact. Saxton and the IBVTA hope that regulatory efforts will not penalize adult smokers by reducing access to affordable, harm-reduction products.
Implications and the Path Forward
The IBVTA’s response underscores the need for a balanced approach that considers public health benefits alongside regulatory objectives. The proposed flat tax and additional regulations highlight a growing regulatory trend around vaping products in the UK. However, there are concerns that these regulations could inadvertently penalize adult smokers or those reliant on affordable vaping products.
The upcoming consultation period offers an opportunity for stakeholders (industry representatives, public health advocates, and consumers alike) to provide feedback, potentially shaping the final version of the tax and related regulations to better serve both public health and industry sustainability.
References:
Vaping Products Duty: consultation response and consultation on additional compliance measures
