Will the UK government introduce a vape tax?

The UK government is set to introduce a new tax on vapes in a bid to curb growing use by teenagers. This follows taxes introduced in Germany and Italy. Will a tax on imported vapes work? What are the other forms of intervention that might be effective in tackling the issue?

Please read: Ministers consider new vaping tax at Budget next week

Graham Watson's insight:

Amidst all the speculation about National Insurance or income tax cuts, there's also a whisper that the Chancellor is going to increase the tax on vapes, with the intention of making them less affordable for children - and also low income groups - in another attempt to seek populist policies. However, there's lots of room for debating whether or not this is good economics.

March 2024 update

Turkeys rarely vote for Christmas, and in this case the CEO of British American Tobacco, Tadeu Marroco, believes that the government's ban on vapes isn't going to be effective, arguing that evidence from elsewhere simply pushes people into the shadow economy. He seems to be of the view that more stringent fines, better regulation of the sector and banning child-friendly flavours of vapes would be better than an outright ban.

Equally, he also believes that the anti-smoking policy - designed to stop people born after 2009 from ever smoking is going to have unintended consequences and thus problematic to enforce.

He's probably right: outright bans are rarely effective, and the opportunity cost of policing them is high, relative to their effect on consumption.