To mark this year’s national No Smoking Day The Local Government association (LGA) has called for a 15% cut in VAT for vaping devices and e-liquids, the Independent Reports. This would bring them in-line with officially recognised smoking cessation products like nicotine patches and gums, and could mean significant savings for retailers and consumers alike.
Cutting VAT on Vaping Products – What it Means for You
The significant reduction in VAT proposed would mean vaping products carry only a 5% VAT requirement. This benefits the entire chain of commerce from manufacture to consumption. While increasing the potential profit margins vaping retailers could enjoy, slashing vape VAT would essentially mean consumers can get their hands on vaping equipment for less than ever before.
If you are a retailer, you would be required to pay significantly less to stock your best-selling vaping ranges, a privilege usually reserved only for medically licenced products. Once reduced VAT became public knowledge, it should be expected that public interest in consuming vaping products would increase. This is largely down to start-up costs being one of the most influential factors preventing people from engaging with next generation products.
Cutting VAT on these products could mean sales of next generation products like e-liquid and e-cigarettes will increase, driving people towards the category either to help them quit smoking or just to give vaping a try. Of course the proposed cut has not yet been approved, and if it is , there is a strong possibility that the discount will only apply to those vaping devices and vape liquids that have been through MHRA registration and approval for a medical licence.
Why Cut VAT on Vaping Products?
Current legislation allows a 5% rate to be applied to “pharmaceutical products designed to help people stop smoking tobacco”. The LGA said there was growing evidence to suggest that using e-cigarettes could help people quit smoking, something that has been mirrored in the latest UK Government update to their e-cigarette evidence. It said making legal vaping products more affordable and treating them equally with other stop-smoking methods would incentivise more people to quit the habit.
The number of UK smokers has continued to decline while the number of vapers has increased, and rising concerns surrounding the current UK stop-smoking resource’s inadequacy to achieve the smoke free generation goal by 2030 have thrust vaping products into the limelight as one of the best options for cessation. This has driven a desire to see these products amalgamated into that resource, hence the MHRA calling for devices to be approved for medical use – something the NHS has also backed provided the devices also meet NICE regulations.
The LGA’s Community Wellbeing Board chairman David Fothergill said: “Council public health teams work hard to help reduce smoking rates in their areas, alongside local charities and community groups, and it is testament to their efforts that smoking rates continue to fall.”
“There is increasing evidence that e-cigarettes, along with other dedicated support, act as an important gateway to help people to stop smoking, which reduces serious illness and death as well as other pressures on health and care services.
“Every pound invested by Government in council-run services such as public health helps to relieve pressure on other services like the NHS, criminal justice and welfare. Councils can help the Government to achieve its ambition of eliminating smoking in England by 2030, through their tobacco control and other public health and support services, but need certainty over their long-term funding.”
Potential Impact for the Vaping Industry
Ultimately even if the tax cut can only apply to vaping products that carry a medical licence, the impact on public perception will still be worth it’s weight in gold. To see vaping products given the same treatment as long-established Nicotine Replacement Therapies (NRTs), at government level, will greatly improve the way in which they are received by people who may previously have held reservations about engaging with the category.
It is widely understood that many people have not tried vaping due to concerns over safety, effectiveness, and many other reasons often spurred on by sensationalised headlines that have dotted the media landscape for many years. To see vaping products, receive tax breaks like medical products, it will reassure consumers that these devices are not just safe and practical, but held to medical standards.
Time will now tell if the UK government will adopt this proposed cut, check back for the latest updates as they develop.