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3.6.2 The impact of government intervention

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Question 3

Market for Disposable Vapes in the UK

Figure 1: Trend in the purchase of single-use disposable vapes (in millions of units, UK, 2018 to 2025)

20182019202020212022202320242025
1545110280360310220140

Extract A: Curbing the disposable vape epidemic

An environmental excise levy on single-use e-cigarettes (disposable vapes) was introduced in the UK in 2022 to address the rising volume of lithium-ion batteries and non-biodegradable plastics ending up in household waste. The levy was structured to add a flat charge of £1.20 per disposable unit by 2024.

The Health and Environment Ministers championed the policy, claiming it has successfully deterred casual and underage vaping while preventing millions of batteries from leaking toxic chemicals into landfills. Without this intervention, the market mechanism fails to internalise the external costs associated with electronic waste disposal and public health impacts.

However, critics argue that lower-income smokers attempting to quit cigarettes have been disproportionately affected, as refillable and reusable vaping systems require a high upfront cost that remains out of reach for many.

Extract B: The disposable vape levy and market distortions

Domestic vape distributors and specialised retail stores have expressed deep concern regarding the design of the UK single-use vape levy.

The levy applies a £1.20 tax on any pre-filled, non-rechargeable vaping device imported or manufactured in the UK. Fully refillable or rechargeable systems are completely exempt.

A spokesperson for the Vape Retailers Association warned that an unintended consequence of the levy would be a rapid expansion of an illicit black market, with unregulated, high-nicotine disposable vapes being smuggled into the country and sold under-the-counter. "By making legal disposables expensive, this policy drives consumers to illicit, uninspected products, bypassing safety standards and tax revenues entirely, while directly funding organised crime," they noted. Many small high-street retailers have reported a severe drop in legitimate sales.

Extract C: Recycling initiatives for electronic waste

It is estimated that over 5 million disposable vapes are thrown away in the UK every week. Behavioral research indicates that placing specialized battery recycling bins in local supermarkets increases vape recycling by 5.5%. However, offering a 50p deposit refund for every returned vape device increases the recycling rate by 14.3%. Combining these financial incentives with educational school campaigns resulted in the most dramatic reductions in littering.

Explain what is meant by the 'unintended consequence' (Extract B, line 8) of the single-use vape levy.

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3.6.2 The impact of government intervention Questions

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