ACS

A centre-right think-tank has called for significant increase in tobacco taxation. The report, Cough Up by Policy Exchange, argues that tax on tobacco should be raised to cover the cost of treating smokers on the NHS and lost productivity. They are calling for a 5% rise in the Budget next week and for further increases over the next five years until the costs of smoking are met by the tax from tobacco. This could mean a packet of cigarettes would cost £7.42. It also calls for greater equalisation of duty between cigarettes and hand rolled tobacco.

The report does not look in detail at what impact such an increase in taxation would have on the illicit trade. It mentions the reduction in the illicit trade achieved through the HMRC’s Tobacco Smuggling Strategy and the proposed WHO protocol set to be signed later this year as an indication that the UK would cope with any increases in illicit trade.

The report also recommends the de-regulation of Nicotine Replacement Therapy (NRT) and making it a legal compulsion for retailers who sell tobacco to also ‘prominently’ sell NRT, to assist people who wanted to give up smoking.

ACS Chief Executive James Lowman said: “This report does not take adequate account of the impact any increase in tax would have on the illicit trade. While we recognise the work HMRC has been doing at the borders to tackle smuggling, the prevalence of illegal tobacco in UK communities continues to grow. This cannot be stemmed so long as the UK duty rates are so much higher than many EU neighbours.