Cheap cigarettes prompt duty change

John Fahey,Pa
Wednesday 23 March 2011 15:37 GMT

Cigarette smokers face a jump of up to 50 pence on a packet of 20 from 6pm today despite the Chancellor sticking to Labour's previously announced plans to raise tobacco duty by 2% above inflation, the tobacco industry said.

George Osborne stuck to figures announced by Alistair Darling in March last year but announced plans to change the "tobacco duty regime" stopping companies producing cheaper cigarettes.

He said: "It's clear that the structure of the tobacco duty regime is being exploited to produce cheaper cigarettes so we will change the regime to narrow the differential between these lower cost brands and the rest, and between cigarettes and hand rolled tobacco.

"This will reduce smoking and improve our nation's health."

Paul Stockall, a tax analyst with the Tobacco Manufacturers' Association, said the Chancellor's "differential" changes apply to "proportional and specific excise rates" - equating to an approximate 50 pence rise on economy cigarettes and 33 pence on premium packs.

"In terms of a 25 gram pouch of hand rolling tobacco, that will rise from 60 pence to about 67 pence, taking a pouch to about £7.35," he said.

Chris Ogden, TMA chief executive, said: "The Irish government recognised that tax increases were driving the illicit trade in tobacco and therefore chose not to raise duties at consecutive Budgets. The Chancellor should be looking to follow their example."

The smokers' lobby group Forest criticised the 2% increase and the Chancellor's "social engineering" approach to smoking.

Director Simon Clark said: "Law-abiding consumers who buy their tobacco in British shops are being penalised unfairly.

"The policy also discriminates against those who can least afford it, especially the elderly and the low paid.

"Increasing tobacco duty could cost the government billions of pounds.

"The people who will benefit most are black marketeers and those who purchase their tobacco abroad."

He added: "The Chancellor said the government's policy on tobacco will reduce smoking.

"It's not the government's role to force people to quit.

"That's social engineering, which we deplore."

James Lowman, chief executive of the Association of Convenience Stores, also hit out saying: "The rise in tobacco duty will drive consumers away from legitimate retailers into a dangerous illegal trade which costs the taxpayer billions every year and already accounts for 20% of all tobacco consumed in the UK.

"This persistent policy of making UK tobacco more expensive than most other countries in Europe means we need a new and credible strategy for catching and deterring those selling cigarettes on our streets."

Amit Aggarwal, chief executive of the No Smoking Day charity, said: "The increase in the cost of cigarettes might just be the incentive needed for anyone planning to quit.

"If they stopped smoking today, they could pocket an extra £45 every week, and would have the added benefit of feeling healthier and looking better."

No changes were made to alcohol duty beyond those already announced.

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