Tuesday 23 August 2016 12:01 am

E-cigarette tax should be zero: IEA think tank

Excise taxes for e-cigarettes and other healthier alternatives should be set to zero, according to the influential Institute of Economic Affairs think tank.

In a report the group argues a lower tax on e-cigarettes would improve public health and consumer welfare.

The report author, economist Carl Philips, slammed policy makers for refusing to take into account “simple economics” when making decisions.

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“Public health people are notoriously economically illiterate. Most of the nonsense in the policy discussion, on all sides, stems from ignoring economics,” said Phillips.

“Just because a choice has health implications does not eliminate the value of economic analysis. The concept of addiction only makes sense in the context of economics, so it is obviously not a reason for ignoring economic science.”

Around 2.2m people in the UK use e-cigarettes, which vaporise a nicotine-based liquid so that it can be inhaled.

Earlier this year a European Union directive laid out plans to bring e-cigarette taxes in line with other tobacco products.

Read more: Vapers rejoice – The tide is turning towards e-cigarettes in France

The present excise regime means that duty must make up at least 57 per cent of the retail price of a packet of cigarettes.

VAT makes up 20 per cent, taking the total tax burden to at least 77 per cent. E-cigarettes are subject to 20 per cent VAT with a cartridge costing between £1.50 and £5 and roughly equivalent to a £10 packet of 20 cigarettes.