Plans for vaping ‘sin tax’ under challenge

Suggestions that the government is planning a new ‘sin tax’ on vaping, in order to raise an additional £40m in tax revenue to help fund its commitment to a £20bn boost in NHS funding, have been strongly opposed by the UK Vaping Industry Association (UKVIA) on the grounds the move risks damaging public health

A UKVIA spokesman said: ‘Imposing a “sin tax” on vaping is counterintuitive to the government’s mission to reduce smokers in the UK and lessen the burden for the NHS.

‘Vaping is a huge public health opportunity which has already helped three million smokers quit or reduce smoking and saved the NHS billions of pounds according to the government’s own research. For the Treasury to impose yet another tax on vaping, not only wouldn’t make sense, but it would be detrimental to the NHS and public health in the UK.’

The association points to research from Public Health England which suggests that such products are around 95% less harmful than conventional cigarettes.

The UKVIA has now written to the Treasury highlighting its concerns. It says the pressure group Action on Smoking and Health has found that, of the nearly three million vapers in the UK, over half have given up smoking, and that 97% of vapers are either smokers or ex-smokers. According to NHS England, smoking costs the NHS £2.5bn a year, with a wider cost to society of £14.7bn annually.

UKVIA says it has evidence that the lower price of vaping products versus cigarettes is one of the key factors convincing smokers to make the switch to vaping and that raising the price of vaping products would lead to a dramatic reduction in smokers switching, and thus increase the costs to the NHS of treating smoking-related conditions.

It also says the cost of nicotine replacement therapies (NRT) to the NHS has fallen sharply from its peak of £65m a year, coinciding with the rise of vaping as a smoking cessation tool. Licensed NRT products receive a reduction in VAT, whereas vaping products are currently taxed at the full VAT rate of 20%, which the association says means vaping is already making a significant tax contribution.

The letter states: ‘In addition, as one of the fastest growing consumer industries in the UK, the vaping industry is responsible for creating thousands of new jobs. This includes jobs in the retail sector but also in research, manufacturing and compliance. The government should support the further growth of the industry, rather than impose additional tax burdens.’

According to the Treasury’s ‘Red Book’ published following Autumn Budget 2017, tobacco tax duties currently bring in some £9bn annually. The Tobacco Manufacturers Association estimates tobacco manufacturers contribute approximately £11.5bn every year to the UK Exchequer in taxes if VAT is included in the total.

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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