Stamping cigarettes with the country of origin would help Customs and Excise officers identify illegally imported cigarettes on which no duty had been paid. Giant X-ray machines may also be used at ports to improve checks on freight for smuggled goods.
The amount lost in tobacco duty has alarmed Customs and Excise officials, and Gordon Brown is expected to announce the appointment of a "smuggling tsar" to lead the offensive against the illegal trade.
"There are health implications as well as the concern about the lost revenue," a Treasury source said last night. The smuggled cigarettes are being sold cheaply in Britain, increasing the risks of smoking-relating diseases.
The Treasury source dismissed reports last night that the losses could force the Chancellor to abandon his Budget strategy and to shelve plans to introduce a lower rate of income tax at 10p in the pound.
Receipts by the Treasury are buoyant and Mr Brown is believed to have sufficient sums to make tax cuts for the lowest paid in next week's Budget. The tobacco industry has warned Mr Brown that the difference in duty between Britain and the Continent is encouraging smuggling, but the Chancellor was warned by Frank Dobson against lowering tobacco duty because of the health risks.
The Secretary of State for Health is due to announce a new publicity campaign at the end of the week to stop young people taking up smoking, and to help smokers kick the habit.
It is expected the Chancellor will increase the price of a packet of 20 cigarettes by 20p to an average of pounds 3.64.Reuse content