Ninety percent tax and rising

Giles Roca, director general of the UK’s Tobacco Manufacturers’ Association (UKTMA), has expressed disappointment that yesterday’s budget raised tobacco taxes.

“We are disappointed that the government has once again raised taxation on tobacco when tax on some of the lowest priced cigarettes already accounts for 90 percent of the price,” he said.

“Taxation on tobacco in the UK is already the highest in the EU meaning that prices in the UK are up to four times higher than in other European countries.’

The UK pre-budget retail price of a typical pack of 20 cigarettes was given by the UKTMA as £9.91, which compares with the equivalent of £3.93 in Spain and £2.81 in Poland.

Taxation on tobacco was said to have increased by more than 50 percent during the past five years.

Yesterday’s increase would simply encourage people to buy from the black market and take business away from the legitimate trade, Roca said.

Such black-market activity added up to about £2.4 billion in lost taxes in the past year alone.

The Chancellor, Philip Hammond, yesterday announced the imposition of a minimum excise tax on cigarettes, whereas previously the UK had been one of several EU states that had not applied some form of minimum tax. “Today’s announcement to introduce minimum excise taxation at a rate of £268.63 per 1,000 cigarettes from 20 May 2017 will increase the total amount of taxation paid on lower priced cigarettes,” said Roca. “We will wait and see how this impacts the tobacco market as a whole.”

The TMA describes itself as the trade association for tobacco companies that operate in the UK: British American Tobacco, Gallaher (a member of the JTI group of companies), and Imperial Tobacco.