TMA Comments on the Government’s Strategy to Combat Tobacco Smuggling

The TMA [1] welcomes the publication today by HM Revenue & Customs (HMRC) and the UK Border Agency (UKBA) of a revised strategy to combat tobacco smuggling.

Since the Tackling Tobacco Smuggling (TTS) strategy was introduced in 2000 the level of tobacco smuggling has been reduced but it still remains stubbornly high [2]. According to new figures also released today, smuggling continues to account for up to 17% of cigarette and 59% of handrolling tobacco consumption, resulting in a loss of up to £3.1 billion to HM Treasury.

Christopher Ogden, Chief Executive of the Tobacco Manufacturers’ Association, commented:

“The revised TTS strategy takes account of the potential offered by the recent formation of the UKBA in terms of an increased presence at points of entry into the UK. It also acknowledges the pro-active work done by TMA’s member companies, through their Memorandum of Understanding [3] with HMRC, in providing Customs with effective tools to detect counterfeit tobacco products (4). We hope our combined activities will result in further reductions in tobacco smuggling.

“However, serious threats remain.  For example, the economic recession is likely to make cheaper smuggled product more attractive to many smokers and a recent government proposal to consider the ban on the display of product in retail outlets will play into the hands of criminals trying to infiltrate the retail network.

“It must also be remembered that the root cause of tobacco smuggling in the UK is the high level of tobacco tax. This encourages millions of smokers to seek cheaper products on the black market and provides the profit motive for organised criminals to smuggle. Any rise in tobacco taxes will be counterproductive, as the Government’s own study acknowledges [5].

“We now look forward to even closer engagement with Government and law enforcement agencies in our common fight against the scourge of tobacco smuggling.”

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Notes to the Editor

[1] The TMA is the trade association for tobacco companies that operate in the UK. Our members are British American Tobacco UK Ltd (www.bat.com), Gallaher Ltd (a member of the JTI Group of companies – www.jti.com), and Imperial Tobacco Ltd. (UK). (www.imperial-tobacco.com).

[2] In 2000/1 up to 24% of cigarette and 69% of handrolling tobacco consumption was estimated to have been smuggled, this has now fallen to 17% and 59% respectively. The Government estimates that between 2000/1 and 2006/7 the revenue lost due to tobacco smuggling could be as much as £26 billion.

[3] The Memorandum of Understanding (MoU) signed in March 2006 between the TMA’s member companies and HM Revenue & Customs create a comprehensive framework for co-operation aimed at combating the smuggling of both genuine and counterfeit tobacco products into the UK as well as seeking to deter all aspects of the illicit trade in tobacco products.

To supplement the MoU, key elements of the agreement have been enshrined in legislation (The Tobacco Products Duty Act 1979, as amended by the Finance Act 2006) so that any tobacco company, operating anywhere in the world, is under the same obligations as the TMA’s member companies to ensure that it does not allow its products to be smuggled.

[4] TMA Press Release ‘Anti-Counterfeit Scheme for UK Tobacco Products’ 26 October 2007

[5] Government’s Economic Service Working Paper no 150. ‘The Demand for Tobacco Products in the UK’, December 2004.