TMA newsTMA response to the APPG on Smoking & Health Inquiry into the Illicit Trade in Tobacco
TMA response to the APPG on Smoking & Health Inquiry into the Illicit Trade in…Tobacco tax increase is a gift to criminal gangs
Commenting on today’s Budget announcement, Jaine Chisholm Caunt, Secretary General of the Tobacco Manufacturers’ Association…
The tax, both excise duty and VAT, raised through the sale of tobacco products continues to be a major source of revenue for the Government, contributing around £12.1 billion annually. This is, according to the Treasury, equivalent to more than 2 pence on the basic rate of income tax or over 11 pence on the top rate of income tax.
On a typical pack of 20 premium cigarettes the total tax burden of £6.17 accounts for 77% of the recommended retail price (RRP) of £7.98. On some of the least expensive brands the total tax burden accounts for up to 88% of the RRP.
It has been the policy of successive Governments to maintain a high level of tax on tobacco products in order to reduce tobacco consumption and the prevalence of smoking. Between 1993 and 2000 a tobacco duty ‘escalator’, which saw year-on-year increases in tobacco duty ahead of inflation, was implemented with the aim of reducing consumption still further.
This policy has resulted in taxes on tobacco products in the UK being amongst the highest in the world and comfortably ahead of those in other EU Member States. For example, in March 2013 the price of a typical pack of premium cigarettes in the UK was £7.98 while in Belgium the price was about £4.00, in Spain it was around £3.80 and Poland it was around £2.65. The differences in the price of handrolling tobacco (HRT) are even more marked. A 50g pouch which cost £16.70 in the UK could be bought in Belgium for around £4.95.
A TMA Taxation Briefing is available to download here.