New tax ‘could give criminals a boost’
INDUSTRY leaders fear the new Vaping Products Duty (VPD) could unintentionally drive the illicit trade and push consumers back to smoking.
VPD has come into force today (1 October) and is charged at a flat rate of £2.20 per 10ml of e-liquid, whether they contain nicotine or not.
And once VAT is included, the new tax will add £2.64 per 10ml to the retail price. Duty stamps are also appearing on retail packaging from now, although retailers can sell unstamped stock until 31 March 2027.
John Dunne, director general of the UK Vaping Industry Association (UKVIA), said: “We are deeply concerned that VPD will have serious unintended consequences on retailers and consumers alike.
“Consumers who can least afford the price increase will be hardest hit and VPD is likely to see some vapers returning to smoking or sourcing cheaper black-market products instead.”
He pointed out that legitimate retailers would have to absorb the new tax, comply with the duty stamp scheme and meet all existing regulatory requirements while illegal sellers would do none of those things.
Furthermore, Dunne said, the changes have come at a time of considerable regulatory change and additional compliance costs for convenience and specialist vape retailers.
UKVIA wants a vape retail licensing scheme, far stronger enforcement against rogue traders and more punitive fines.
Dunne added: “Without these measures in place, there is a very real risk that VPD will see responsible retailers pay the price while illicit traders are handed an even greater competitive advantage.”
Pete Cheema, chief exec of the Scottish Grocers’ Federation (SGF) voiced many of the same fears. He welcomed the duty regime for giving HMRC greater scope to crack down on illicit trade.
But he also feared the rising price difference between legal and bogus products could push customers to buy from crooks and endanger public health.
Cheema called on UK and Scottish ministers to mitigate against any unintended results of the nicotine products changes.
He said: “As legal products become more expensive, organised criminal networks can exploit the demand for cheaper alternatives, increasing the availability of unregulated products and weakening the effectiveness of the policy.
“Any new duty regime should therefore be accompanied by robust enforcement and anti-smuggling measures to minimise the risk of expanding the illicit market.”
