In June 2020 the European Council announced that it was time to tax vaping products in a similar manner to tobacco products, with a plan to introduce a tax on vapes which would apply across the whole of the EU. Before it becomes a done deal it must first pass to the European Commission, and this has been an issue that has rattled around for many years Anne will come as a bit of a blow for the vaping industry. It was initially sold as a good thing, because an excise tax that was uniform would ensure that EU states could not levy significantly high taxes which was thought to be the reason why the vaping industry in Italy was destroyed. Until now, the UK government has not insisted on taxing electronic cigarettes and e-liquids and they are rated number one in the world for being independent of the tobacco lobby. But can the UK avoid it?
What Would Happen?
Minnesota is quite a good case study, they found themselves subject to a 95% tariff on e-liquid which had a devastating effect on smokers looking to use vaping as an alternative. Figures showed that it would deter over 32,000 people from quitting. Worse still, extensive studies also showed new smokers went up in numbers, and this included a 6% increase among pregnant women. In 2014 Italy saw a massive vape tax imposed and this took 70% of the number of vapers. They once had 4000 vaping shops, and this fell to 1000 and cost approximately 10,000 people their job. Unsurprisingly, there was an increase in illegal and imported e-liquids as people felt they were being unfairly treated.
Will it Come to the UK?
The short answer is it might. The EU isn't exactly known for being quick, and approval is needed before anything can be done from the EU Commission. It would then be reasonable that companies would be given time to ensure that they could implement any necessary changes. It is now down to when we leave the EU and when the rulings come in. Because the UK is committed to not taxing any vaping products it is likely that if we leave the EU before the ruling comes in, we will not be affected. However, Covid-19 has definitely had an impact on the timings as everything has gone on hold to deal with the pandemic.
Of course, if it does hit the UK prices will increase and a black market is a very real problem. This means that all the work we have done to ensure the safety of supplies can easily be undone because there will be no standards or control over a black-market supply. There would also be an issue for suppliers who are based in the UK as to how the tax would be collected. Things like this that have happened in other industries have ended up destroying smaller businesses because they simply cannot cope with the complexities needed to make these changes and abide by the rules. It would be a shame if this happened in the vaping industry.
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