According to a report by the Financial Times on March 6, the CEO of British American Tobacco, Tadeu Marroco, has expressed support for the UK's plan to impose a tax on e-cigarettes, stating that tobacco manufacturers have learned to "love regulation".
I think this could be a good idea, I believe we need more regulation.
The UK Chancellor of the Exchequer, Jeremy Hunt, announced a new tax policy for e-cigarettes in Wednesday's Spring Budget, aimed at reducing youth smoking rates. According to officials at the UK Treasury, the new tax rates will vary based on the nicotine content of e-cigarettes, with tobacco tax increases focusing more on traditional cigarettes to ensure the 4.7 million e-cigarette users in the UK are not incentivized to return to smoking. Hunt stated that the e-cigarette tax will allow the government to better regulate the industry, noting that illegal products currently make up one-third of the UK e-cigarette market, potentially taking market share away from British American Tobacco and other companies.
The Vuse e-cigarette product from the company is facing intense competition from Chinese brands Elf Bar and Lost Mary in attracting e-cigarette users in the UK.
This year, the UK government has announced plans to ban disposable e-cigarettes and restrict the flavors of e-cigarettes in response to a sharp increase in the number of underage individuals using e-cigarettes. The ban is expected to come into effect in April 2025.
Maroko stated that he hopes to introduce a "moderate" e-cigarette tax, adding that the tax "needs to be consistent with the continuum of risks," therefore "taxing conventional cigarettes more and e-cigarettes much less." The company's competitor, Imperial Tobacco, also supports the e-cigarette tax plan.
According to the tax proposal, the Finance Minister will announce a three-tier e-cigarette tax - it will be illegal for teenagers under the age of 18 to purchase e-cigarettes. This tax measure may be implemented before October 2026 to allow time for policy negotiations.
Finally, the contingency plan also mentions that non-nicotine e-liquid will be taxed at £1 per 10 milliliters, e-liquids with nicotine content equivalent to a cigarette or less will face a tax rate of £2 per 10 milliliters, and e-liquids exceeding the nicotine content of a cigarette will be taxed at £3 per 10 milliliters.
Currently, e-cigarette products have been confirmed to have a 20% value-added tax rate, while drugs aimed at preventing smoking are only subject to a lower 5% value-added tax. According to sources, the Chancellor of the Exchequer is expected to further increase tobacco taxes for the second time within six months. In last November's autumn statement, Hunt raised taxes on all tobacco products by 2 percentage points, exceeding the retail price index.
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