22 Nov TMA AUTUMN BUDGET RESPONSE
Responding to today’s Budget, Giles Roca, Director General of the TMA said:
“Tobacco prices have increased by around 70% since 2010 including in effect three increases already this year thanks to the March budget increase, the ban on small packs and the introduction of a minimum excise tax. Today’s announcement will simply lose taxpayers money, push ever more smokers to avoid paying UK duty and boost the black market and the criminal gangs that operate it. The most effective way to get smokers to quit is not high tax but the development of new products such as e-cigarettes. Also, such an increase, just before the crucial Christmas trading period, will significantly impact on retailers including many corner shops for whom tobacco makes up around 35% of their business.”
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Notes to Editors
1. Independent research and evidence conducted by the likes of Royal United Services Institute (RUSI) shows that a high level of taxation on tobacco products, such as that in operation in Britain, is strongly related to a well-developed illicit market.
2. The Chancellor increased tobacco duty by 5.9% at the March 2017 budget, he also introduced a Minimum Excise Tax, whilst on 20th May 2017 all small packs of tobacco were banned under EU legislation, in effect, doubling the cost of the cheapest legitimate packs. The 20th May also saw the full introduction of plain packaging. Counterfeit plain packs have begun to appear in the UK.
3. Between 2010 and 2017, the average duty burden on cigarettes increased by more than 65% and on hand rolling tobacco by more than 75%.
4. The latest tobacco tax gap figures, the amount lost to the Treasury due to the illicit trade and cross border shopping, increased to £3.1billion in 2016/17 – this is the second highest loss to the Treasury after VAT avoidance.
5. A survey of around 12,000 smokers conducted in June 2017 by the TMA shows that around 72% had avoided paying UK duties in the last year either by buying from the black market or from cross border shopping.
6. The UK has the (second) highest levels of tobacco taxation in the EU.
7. For more Budget reaction including a breakdown of the MET and EU price maps click here