Most vapers are unaware that the cost of their vaping products is set to rise sharply when the government’s new vape products duty comes into force this week, says new research from the UK’s Vaping Industry Association (UKVIA).
A survey of almost 3,500 adults who vape to quit or stay off cigarettes found that more than half had no idea the new duty was being introduced, while almost 60% did not know it would also apply to nicotine-free products.
Duty rate and price impact
The duty takes effect on Thursday (1 October), at a rate of £2.20 per 10ml of e-liquid – £2.64 once VAT is applied – with the price of vaping products set to rise by as much as 264%. The UKVIA warns that the biggest increases will be seen on lower-cost products, which are more commonly used by lower-income vapers.
However, the impact of the duty will be felt across the community, with 98% of those surveyed saying affordability was important in their decision to switch from cigarettes to vapes.
Survey findings on behaviour
Further findings include:
- About half of respondents would return to smoking or turn to the black market once the duty comes into force – equivalent to some 2.5 million adults based on the UK vaping population
- Only one in 10 said their vaping habits would be unaffected
- Two-thirds believe the duty will reduce the number of adult smokers making the switch
- About two-thirds believe the duty will have little or no effect on youth vaping
- More than 90% believe the duty will increase the black market
- Almost 70% want the duty completely scrapped, while one in five want it introduced at a lower rate
Consumption data questioned
The UKVIA research also found that average reported weekly e-liquid consumption was 24ml – more than twice the 11.9ml estimate used by HMRC in its modelling for the duty. The association argues that this disparity calls into question the basis on which the duty rate has been calculated and provides strong evidence that the Treasury could achieve its intended revenue returns at a lower rate.
This finding helped inform a new report by the Centre for Economics and Business Research (CEBR), commissioned by online vape retailer Vape Club, examining the potential health and economic impacts of the duty and laying out the case for two lower rates:
- At the current rate of £2.20 per 10ml, CEBR forecasts that 946,000 vapers and dual users could switch to smoking only, resulting in an additional 1.5 billion cigarettes being smoked each year and an estimated £306.6m increase in healthcare and productivity costs.
- At a reduced rate of £1.10, CEBR estimates that the number of adults switching exclusively to smoking would fall to 560,000, with additional annual healthcare and productivity costs dropping by about 90% to £38.8m.
- At 80p, the number switching exclusively to smoking falls to 430,000, with CEBR modelling showing a £45.5m annual gain in healthcare and productivity.
Dan Marchant, director of Vape Club, said: “There has been a serious miscalculation in how much e-liquid people actually use and that has fed into a policy that could have a real impact on the health of countless vapers and smokers.
“We know we are unlikely to see the duty disappear altogether, but the cost of getting this wrong is simply too high to bear, both for the NHS and for people across the country who rely on vaping to stay away from cigarettes.”
Industry and government response
UKVIA director general John Dunne said: “There is absolutely no debate that we need to prevent young people from accessing vaping products, and it’s not that the industry is flatly opposed to a duty increase, but the incoming rate is nothing short of a public health timebomb.
“If we want to talk about duty, how about the government’s duty to protect one of the most effective tools available to adults trying to quit smoking?
“The government says the duty will help reduce the appeal of vaping to young people while preserving the financial incentive for smokers to switch, with the money raised also intended to support the NHS.
“But if the result is more adults returning to smoking and a greater burden on the health service from smoking-related illness, that is completely at odds with what this policy is trying to achieve.
“And it’s not as if this should come as a surprise. HMRC’s own research three years ago showed just how sensitive vaping is to price, with 62% of those surveyed as part of the ‘Understanding the Vaping Market’ report saying they would reduce how much they vape if prices doubled.”
In the wake of its research, UKVIA is calling for an urgent meeting between HM Treasury, HMRC and the Department of Health, alongside representatives from responsible manufacturers, retailers, consumer groups and the public health community to discuss the findings and “lay out a better path forward”.
The UKVIA will also be monitoring the impact of the duty on smoking rates, NHS costs, illicit products and the closure of legitimate vape businesses.
The CEBR report and survey findings come just weeks after the UKVIA launched its national “Enough is Enough” campaign, which claims that the whirlwind of new policies and proposals risks making vaping less accessible, harder to choose and more expensive for the very adults it can help become smoke-free. At the centre of the campaign is a petition calling on the government to sign up to a 10-point Fair Deal for Vaping, including a review of the vaping products duty rate, a national awareness campaign to tackle widespread misperceptions, recognition of vape shops as community assets and protection for flavours, alongside measures on packaging, display and advertising.
