E-Cigarettes, Regulation and Tax Duty
Everyone knows the health risks associated with smoking and the increased risk of getting cancer. Smokers of cigarettes have a far greater likelihood of dying from cancer at a younger age than non-smokers. The large tobacco companies carry a lot of power and influence.
Government Responsibility & Smoking
The UK government needs the cigarette duty, which in 2011-12 was a little over £12 billion. Pushing smokers to stop would be very costly for the country. Alcohol is similar in that it raises billions in duty while being harmful to users.
Recently, there have been news stories surrounding the safety of electronic cigarettes. It seems bizarre to us that 130,000 people hurt themselves at work each year, and less than 200 die, but the Governments response is extensive health and safety legislation and the costly requirement of the creation of a risk assessment for every task required to complete a job, but 100,000 people die a year from smoking in the UK and the response is to make them stand outside to do it.
The country can’ afford for its smokers to all give up smoking. Are we to assume that the Government doesn’t mind too much about 100,000 deaths annually because they are profitable deaths?
E-Cigarettes and Possible Regulation
At some point as the revenue from tobacco duty falls, the government will look to regulate and tax e-liquid and vaporizers in order to replace the lost taxes. If it becomes regulated then it’ll have to be made by GSK and sold in Boots alongside the patches and chewing gum that they already sell.
Lost tobacco duty needs to be found from somewhere so it seems only logical that e-cigarettes will be regulated and taxed. It is probable that health concerns will be used to regulate e-cigarettes which will allow the government to tax them and recover lost tobacco tax revenues.
Opponents to E-Cigarettes
Two powerful industries, the tobacco and the smoking cessation sectors are going to be worst hit by increased e-cigarette use. Even though nicotine gum and patches deliver nicotine, many smokers prefer the satisfying nicotine hit that they receive from inhaling an electronic cigarette or vaporizer.
Despite not wanting to lose customers to electronic cigarettes, tobacco manufacturers aren’t in a position to argue against them on health grounds. The smoking cessation industry has been the driving force behind the negative press given to e-cigarettes, possibly being supported in some quarters by sections of the tobacco industry.
Potential Government Legislation
The Governments main concern it seems to me is in how it can effectively tax e-liquid in order to replace the lose tobacco income it currently receives. Because e-liquid is made up of easy to obtain ingredients, it will always be possible to make your own e-liquid, thereby negating any duty levied on regulated products.
Regulated manufacturers of e-liquid will no doubt do all they can to warn us of the dangers of making our own e-liquid. Smokers in general are prepared to try cheaper cigarettes, regardless of their source and whether they are “legitimate” or not. The more popular e-cigarettes become, the soon they will face regulation. In order for e-cigarettes to become a mainstream product, the government will need to be able to apply duty to e-liquid.
If electronic devices can’t be taxed successfully then regardless of the fact that they are a less harmful alternative to smoking, they will ultimately be banned. It is very probable that electronic smoking devices will be regulated to some degree in the near future.
Regulation is necessary because e-cigarettes have the potential to significantly reduce the tobacco tax revenue the Government receives annually.
It seems increasingly unlikely that electronic cigarettes will avoid all regulation because their growing popularity will keep eating into the governments tobacco revenues, forcing the treasury to introduce taxes on vaporizer devices to balance their books.