Taxing vaping is really very silly indeed
It probably is true that each and every budget, ever, has contained at least one piece of rampant stupidity. But in this run up to a budget perhaps it’s possible to head the Chancellor off from a mooted foolishness:
Rachel Reeves is considering raising the tax on vaping products in her budget this month as figures show that a quarter of 11 to 15-year-olds in England have used e-cigarettes.
The chancellor is looking at increasing the tax after a consultation carried out by the last Conservative government.
In his budget in March, Jeremy Hunt announced a tax on vaping products, which is due to take effect in October 2026, in a move to make vaping unaffordable for children.
We do not wish to make vaping unaffordable for children. Far from it in fact - we’d like teens to vape.
Economics distinguishes between two forms of correlation. Two things may well be linked, but how are they linked? A complement is where more of the one thing is likely to lead to more of the second. Say, tonic sales rising as gin sales do. A substitute is where more of the one leads to less of the other. More vaping leading to less cigarette smoking. And, yes, we do know this is true - vaping is a substitute for cigarettes, more vaping leads to less actual ‘baccy being fired up.
So, we’d like to reduce the smoking rate, especially among those impressionable teens. Thus we’d rather those rebels - teenage rebellion is not something we’re about to eliminate - vaped than smoked. We therefore want to expand the price differential between the two - less tax, possibly even subsidy, for vaping as taxes on cigarettes continue their rise. Raising taxes on vaping is contraindicated therefore.
Yes, it’s true, there are those in public health who insist that no one should ever touch a drop or whiff of that evil nicotine but in this country at least we’ve never allowed the prohibitionist end of the dissenting churches to make public policy. Well, not since the Puritans at least and we sent at least some of them off across the ocean such was our disgust.
We have real world evidence as well. Australia is famously restrictive on vaping. Nicotine containing versions are only available upon prescription:
The proportion of teenagers smoking has increased for the first time in 25 years in a situation health experts have labelled “alarming”.
Data analysed by Cancer Council Victoria’s Centre for Behavioural Research in Cancer (CBRC) has revealed a threefold increase in the proportion of 14 to 17-year-olds smoking tobacco in the past four years, from 2.1% in 2018 to 6.7% in 2022.
As compared to the US:
In 2024, current (previous 30-day) use of any tobacco product was reported by 10.1% of high school students (representing 1.58 million students) and 5.4% of middle school students (representing 640,000 students). Among all students, e-cigarettes were the most commonly reported tobacco product currently used (5.9%), followed by nicotine pouches (1.8%), cigarettes (1.4%), cigars (1.2%), smokeless tobacco (1.2%), other oral nicotine products (1.2%), heated tobacco products (0.8%), hookahs (0.7%), and pipe tobacco (0.5%).
More vaping, less ‘baccy among teens. Less vaping, more ‘baccy among teens. Vaping is a substitute for smoking tobacco, not a complement. If we actually desire lower rates of tobacco smoking among teens then we should subsidise vaping, not tax it.
Now it is true that tobacco smoking kills people and that this - therefore - saves the National Health Service money. But increasing the tax upon vapes now in order to save the NHS cash 50 years hence seems to us rather longer than the timescales politics normally considers. Other than that we see no useful justification for the silliness of taxing vapes.
As we say, we’re sure every budget has contained at least one piece of abject stupidity. But hopefully not this one in this one, eh?
Tim Worstall