- By Henry Jeffman & Paul Seddon
- BBC News
The government is considering announcing a new tax on neem in next week's budget.
Currently, vaping products are subject to VAT – but unlike tobacco, they are not subject to a separate tax.
Tobacco taxes may also increase in the budget, ensuring vaping remains affordable.
Ministers fear that vaping's relatively cheap price will make the products more accessible to young people and non-smokers.
In November's King's Speech, the government first said it was considering a vaping levy, citing a “significant difference” with a tax on tobacco.
According to the Times, this First announced the storyA new tax will be imposed on vapes liquid, with higher tax rates for products with higher nicotine content.
Treasury analysis suggests the new vaping tax, along with tobacco tax increases, could eventually raise around £500m a year.
A separate tax on tobacco products was raised by 2% above last year's inflation as part of the Autumn Statement.
Many European countries have e-cigarette taxes, and the European Commission plans to introduce minimum levels across the EU.
After plans to introduce a UK-wide ban on disposable vapes were announced last month, restrictions on flavors and how they can be packaged have been announced.
UK government ministers responsible for delivering the ban in the UK hope to pass the appropriate legislation before the next election.
Budget alert
The ban will come into effect in early 2025, with retailers given six months to make changes once the timing is confirmed.
The government also plans to increase fines for retailers who sell vapes to under-18s, which is illegal.
Against a backdrop of sluggish economic growth, next week's budget will see the government unveil its tax and spending plans for next year.
Chancellor Jeremy Hunt has indicated he wants to cut taxes in the last budget before the general election.
But the Institute of Fiscal Studies, a think tank, said the UK was in “worst shape”.
In the autumn report, it noted that the chancellor was “only” able to meet the government's requirement that official projections show a reduction in debt as a share of national income within five years.
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