New U.K. Vaping Levy is ‘Stupid’: Critics

The imposition of a vape levy in the U.K. is “stupid, short-sighted and potentially counterproductive,” according to smokers’ rights group Forest.

During his budget speech in Parliament on March 6, Finance Minister Jeremy Hunt said he is planning to introduce an extra tax on e-cigarettes from October 2026, aiming to make vaping more expensive and deter nonsmokers from taking it up.

Currently, most vapes in Britain are subject to value-added tax at the standard 20 percent rate, but there is no extra levy applied. Hunt said the government would also introduce a one-off increase in tobacco duty to maintain the financial incentive to choose vaping over smoking.

Nonetheless, critics warned that the new vape tax would discourage smokers from transitioning to less harmful nicotine products.

“If the government is serious about advocating vaping as a substantially less harmful alternative to smoking, a levy on vaping products sends completely the wrong message to consumers,” said Simon Clark, director of Forest.

“Vaping products are already subject to VAT. Imposing excise duty as well is a stupid, short-sighted and potentially counterproductive measure that could deter many existing smokers from switching to a reduced-risk product that has helped millions of smokers to quit.”

Maggie Rae, president of the Epidemiology and Public Health Section of the Royal Society of Medicine, said any tax must be carefully considered to ensure it benefits public health.

“It’s imperative we ensure medicinal use of vapes continues to be encouraged, as smoking cessation remains the matter of greater importance,” she said.

Clark noted that above-inflation increases in the cost of tobacco disproportionately punish those on lower incomes.

“Further tax hikes will drive even more smokers to the black market, taking money from legitimate retailers and putting it into the hands of criminal gangs,” he said.

Jefferies analyst Owen Bennett said the tax could benefit larger players like BAT by making it harder for smaller players to compete.

“BAT, especially given its highly profitable broader cigarette business, can afford to swallow the tax and not adjust prices,” he told Reuters, whereas it could make smaller firms’ products unviable.