If Ever There Was a Good Time to Switch to Vaping
Smoking Got Even More Expensive
What a good time to switch to vaping. In the spring budget last week Chancellor Phillip Hammond announced a 35p rise on the cost of a packet of cigarettes, and a 44p rise in the cost of a packet of rolling tobacco.
This price hike on tobacco was planned back in 2014 so the increase was just an iteration of something that already existed. But it does push the average price of cigarettes up to around £10.
And a pack-a-day habit would cost about £300 a month.
At least 57% of cigarettes price must come from duties and VAT increases this to 77%. Ecigarettes and eliquid are currently taxed at 20%, that said, nothing is set in stone. Especially where government revenue sources are concerned.
So Will Vaping Be Taxed Too?
Around a year ago EU diplomats started looking at the tax differences between cigarettes and ecigarettes. They proposed relabelling ecigarettes as tobacco products for taxation purposes.
The proposal is expected to be ready this year, and while there is no suggestion yet that ecigarettes would be subject to any taxation, the proposal was borne from the notion of having a minimum excise duty on ecigarettes. This duty could then be raised as required by each individual country.
It would offset the reduction of duties from cigarettes, helping in particular smaller member EU states.
Matching ecigarettes to the same levels of taxation as cigarettes would mean a device costing £23 would instead cost £54.
However, Britain is leaving the EU so what happens after that remains a mystery.
Further Prices Hikes for Cigarettes
Cigarettes are also set to get a second price rise in May this year when a Minimum Excise Tax (MET) is introduced, which targets cheaper cigarettes in an aim to meet health targets.
“Introducing a MET will support public health objectives, tackle the very cheapest cigarettes and promote fiscal sustainability.
“Health impact assessment evidence suggests that there are significant public health benefits to increasing duty rates (and therefore the price of) cigarettes and other tobacco. Any reduction in smoking prevalence will have a positive impact on health and reduce the cost to the NHS of smoking-related illness. There may also be reductions in other costs that arise from the health impacts of tobacco use.”
According to the government website Gov.UK, the report into the increase found that the revenue benefit from the increase would be negligible. The increase comes into effect on May 20th the same day the Tobacco Products Directive legislation comes fully into effect.