‘Heat not burn’ brands and anti-smoking campaigners have welcomed the government’s decision to create a new category for heated tobacco products under its excise duty regime.
Publishing its response to an industry consultation yesterday, HMRC said it agreed with two-thirds of respondents that creating a separate category for heated tobacco was the best way to give certainty to industry and consumers.
The UK tobacco tax regime currently imposes a different level of duty across five categories: cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco. Heated tobacco products, which are a relatively new innovation to the market and produce vapour rather than smoke, are currently assessed by HMRC on a case-by-case basis to determine the appropriate liability for duty.
Introducing a new category specifically for heated tobacco would “give certainty to consumers and producers about the duty heated tobacco products are liable for, reduce complexity in the duty system and ensure that products are captured efficiently”, HMRC said.
The category would capture the tobacco used in ‘heat not burn’ devices, not the devices themselves, it added, and duty would be calculated by weight to ensure the tax was based on the amount of tobacco in the product.
Peter Nixon, managing director for Philip Morris UK and Ireland, which owns the Iqos ‘heat not burn’ brand, said the government’s decision was an “important first step”.
“I welcome the recognition that heated tobacco is fundamentally different from combustible tobacco,” he added. “Whilst the rates are yet to be set, we believe the tax level should be proportionate to harm and heated tobacco should therefore be taxed at a lower rate.”
Deborah Arnott, chief executive of health charity Action on Smoking and Health (ASH), also welcomed the move, arguing it enabled the government to leave future tax options open on heated tobacco products.
“ASH takes the view that tobacco control policy in relation to heated tobacco products should reflect objective evidence on harm and benefits,” she added.
“Since this is not yet robust, tax policy in relation to such products should allow flexibility over future levels of tax, and the possibility should exist for these levels to reflect relative levels of harm as against other tobacco products.
However, smoking lobby group Forest (Freedom Organisation for the Right to Enjoy Smoking Tobacco) argued heated tobacco products, which a recent PHE report concluded were less harmful than regular cigarettes, should be totally exempt from tobacco excise duty.
“Heated tobacco may not be as safe as electronic cigarettes but current evidence suggests there is almost certain to be a reduction in risk for cigarette smokers,” said director Simon Clark.
“Why would any government want to undermine the future of a product that may encourage smokers to quit voluntarily and without coercion?”
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