Gordon Brown, the Chancellor, said yesterday that smugglers were costing the UK pounds 1.5bn in lost tax. The huge scale of the illegal operations from the European Union, where prices are roughly half the UK level, has been blamed for flooding the market with cheap cigarettes and causing a rise in the number of smokers for the first time in years.
Mr Brown, speaking the day after he added 17.5p to a packet of 20 cigarettes, said he would not allow organised criminals to undermine measures intended to protect people's health. The Chancellor acknowledged that smuggling had risen sharply as the level of duty had gone up. The Government intends to recruit a high-profile figure - an anti-smuggling "tsar" - to head the new initiative.
Among the ideas the official will consider is for every packet of cigarettes to be stamped with its country of origin, which would allow Customs and Excise to identify and seize illegal imports and to prosecute those selling them. Tighter security at ports and tougher sentences could also be examined.
Mr Brown said that only a few years ago about 3 per cent of tobacco in Britain had been smuggled. That figure had risen to about 10 per cent and was still increasing. "We are talking about organised crime. The loss of pounds 1.5bn in revenues is not something we are prepared to accept," he said.
So successful is the black market that officials fear that, in the next three years, up to one in five cigarettes in the UK will be smuggled. Criminal networks see tobacco smuggling as a safer, but highly profitable alternative to drug-smuggling.Smugglers can pay pounds 1.60 for a 50g pack of tobacco that costs pounds 7.45 in Britain. Hawkers in markets and pubs sell duty-free cigarettes at pounds 2.50 a packet. At pre-Budget costs, pounds 2.90 of the price of legitimately sold cigarettes goes to the Treasury.
At the centre of the smuggling operation is the tiny tax-free European principality of Andorra. In 1997, it imported 3.1bn cigarettes - equal to every resident smoking seven packs a day. Gangs set up front companies there to buy cigarettes from British manufacturers. The tobacco, exempt from duty, is smuggled back. British gangs make frequent trips to France and Belgium, where warehouses can legally sell tobacco for a quarter of the UK price.Reuse content