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​Lower e-cigarette taxes could help smokers switch

Posted on 24th Aug 2016 | Share this article:

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multiCIG has backed calls by an influential independent think tank to set excise taxes for e-cigarettes and other healthier alternatives to zero.

The Institute for Economic Affairs this week published a report, Understanding the basic economics of tobacco harm reduction, which argued that a lower tax on e-cigarettes would improve public health and consumer welfare. It stated that substituting cigarettes for a less risky product would be welfare-enhancing for most smokers.

Earlier this year, an EU directive laid out plans to bring e-cigarette tax in line with other tobacco products. The current tax regime means that duty must make up at least 57% of the retail price of a packet of cigarettes. VAT makes up 20% taking the total tax burden to at least 77%.

E-cigarettes are currently subject to 20% VAT.

Christian Mulcahy, our business development director, said: “It would be unrealistic to expect that Treasury is not going to impose increased excise duties on e-cigarettes, but we would echo the findings of this report and urge policymakers to consider the wider implications of making e-cigarettes more expensive to smokers looking to switch to what has been proven to be a less harmful alternative.”

An expert independent evidence review (e-cigarettes – an evidence update) carried out by Public Health England (PHE) last summer concluded that the current best estimate is that e-cigarettes are around 95% less harmful than smoking.

The comprehensive review found that almost all of the then 2.6 million adults using e-cigarettes in the UK were current or ex-smokers, most of whom used the devices to help them quit smoking or to prevent them going back to cigarettes.

Christian added: “E-cigarettes are now the most popular smoking cessation aid used by UK adults looking to switch to a less harmful alternative.

“Government should be encouraging more smokers to switch from traditional tobacco products to e-cigarettes, not putting obstacles such as increasing the cost in the way of that.”

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