🤯 Picked by our AI, this stock rallied more than Nvidia this month, yielding 94% since MarchSee the stock

Britain plans new tax on vaping from 2026

Published 03/06/2024, 01:44 PM
Updated 03/06/2024, 01:46 PM
© Reuters. A woman holds an e-cigarette as she vapes on a street in Manchester, Britain March 6, 2024. REUTERS/Temilade Adelaja

LONDON (Reuters) -British finance minister Jeremy Hunt said he plans an extra tax on vaping products from October 2026 to make the habit more expensive and deter non-smokers from taking it up.

Hunt said the government would introduce a one-off increase in tobacco duty at the same time to maintain the financial incentive to choose vaping over smoking.

The duty, which would be introduced from October 2026, was intended to "discourage non-smokers from taking up vaping," Hunt said in his budget speech to parliament on Wednesday, adding the government would consult on its design.

Given ever-stricter tobacco regulations and falling smoking rates in some markets, for tobacco giants like British American Tobacco (NYSE:BTI) vapes potentially represent an increasingly important revenue stream.

Jefferies analyst Owen Bennett said the tax could benefit larger players such as BAT (LON:BATS) 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 said, whereas it could make smaller firms' products unviable.

BAT's shares were flat at 1451 GMT, while rival Imperial Brand's were just over 1% higher.

BAT said it supports the introduction of a "low" excise tax on the nicotine-infused liquid in vapes to better control the market, but said a tax linked to nicotine content would be difficult to enforce.

"We encourage the government to implement a vape tax sooner than October 2026 to tackle the illicit market that is already prolific," a BAT UK spokesperson added.

A sharp rise in vape use by non-smokers and young people has forced the British government - a relative proponent of vaping as a way to reduce the harms of smoking - to consider tougher controls.

© Reuters. A woman holds an e-cigarette as she vapes on a street in Manchester, Britain March 6, 2024. REUTERS/Temilade Adelaja

Most vapes are subject to value-added tax at the standard 20% rate, but no extra levy is applied.

Maggie Rae, president of the Epidemiology & Public Health Section of the Royal Society of Medicine, said any tax must be carefully considered to ensure it does not undermine efforts to encourage smokers to quit.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.