Poor pay dearly for tobacco addiction and cough up out of all proportion on duty

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Higher tobacco duty falls more heavily on the poor because the richest third of the population has more or less given up smoking, while the bottom fifth are puffing away as heavily as ever, according to a report funded by the cigarette lobby.

The Fair Cigarette Tax Campaign, the lobby group financially supported by tobacco manufacturers, will use the claims as ammunition against further increases in duty.

The reports also claims the increases in real terms - started by the Conservatives and continued by the present government - are boosting illegal imports from abroad, at a cost in lost tax receipts of pounds 690m a year.

The findings, based on research by London Economics, a consultancy firm, suggest high tobacco taxes redistribute the burden from the rich to the poor. The duty paid by the top 30 per cent of the income distribution has fallen since 1993, even though rates of duty have climbed. The amount paid by the 20 per cent at the bottom has increased over the same period, and these households spend more every week on tobacco and tobacco tax than better-off households.

The poorest tenth of the population spend just under 14 per cent of their income on tobacco tax, compared to less than half a per cent for the richest tenth.

The pattern of spending means that every increase in the duty makes it an ever more regressive tax, penalising the poor more than the rich.

The report was financed by Philip Morris.