Tax and tobacco
Wednesday, March 12, 2008 We will hear today what Alastair Darling has in mind for smokers in his first Budget since he succeeded Gordon Brown as Chancellor. In recent years - after a disastrous experiment known as the "tobacco escalator" which forced the tax on tobacco to rise, each year, by inflation plus three (and later five) percent - tobacco taxation has increased, more modestly, in line with inflation.
But that's not enough for the likes of ASH. Anti-smoking campaigners have been lobbying the government to re-introduce the so-called "real-price escalator" which would see the tax on tobacco increase by at least 10p per pack above the rate of inflation.
I can't believe that Darling would embrace a discredited policy that, when it was previously implemented, led to a smuggling epidemic that cost the Treasury £3 billion a year in lost revenue, caused chaotic scenes in many of Britain's ports, had little effect on the smoking rates, and hit the elderly and low paid the hardest - but you never know.
Politicians, and their advisors, are curious creatures and we may find that Darling - hitherto a rather anonymous figure - wants to be "his own man". Smokers are an easy target and hitting them where it hurts (in the pocket) may be too hard to resist, especially on No Smoking Day. We'll find out shortly.
Simon Clark
Duty on tobacco up 11p per pack of 20 cigarettes, in line with inflation. Could have been worse. At least the Chancellor has resisted the demands of the anti-smoking lobby. Bad news for drinkers, though. Tax on alcohol up 6% above inflation now, plus a further 2% above inflation for the next four years. Better buy shares in cross-Channel ferries!
Simon Clark
Forest press release: "We welcome the Chancellor's decision to reject an increase in duty above the rate of inflation, but the increased cost of cigarettes will still hit those who can least afford it, especially the elderly, the low paid and the unemployed.
"The biggest loser, however, is the British taxpayer, because under this government the tax on tobacco has risen to record levels. The knock-on effect is a huge increase in smuggling and a major loss of revenue to the Treasury.
"The problem will only be solved when the Chancellor is brave enough to freeze or reduce tobacco taxation to a level that is prudent rather than politically correct."
Reader Comments (6)
Darling will have to increase tax rates as the government coffers are being hit by a combination of factors of which the smoking ban is one.While smokers may be an easy target the threat of smuggling makes it a risky move. I bet on alcohol being hit as they can blame supermarkets for making the government intervene.
However, the most disgusting thing that they are doing is removing the 10% bracket for income tax which will impact on the lowest paid workers. Those on £9,000 will be worse off while those on £30,000 will be better off. The government says that tax credits will be there to assist the low paid but surely that is just giving them their own money back. Nanny can then decide how much exactly people need to live on and what they can spend it on.
I have this terrible feeling that they will lower the amount of tobacco which can be brought into this country from the EU duty free.
I hope I am wrong, but I wouldn't hold your breath on it.
Peter. They cannot stop people bringing in any amount of alcohol or tobacco from the EU if it is for personal use as it would have been purchased 'Duty Paid'. Only non EU countries can sell 'Duty Free' and those limits are long set.
All tehy can do is put pressure on the other countries to increase the duties they charge. This is unlikely given the amount of money made by the newer EU member states.
Peter
Whatever is brought in from the EU, that is bought in the country and not the duty free shops, is Duty Paid in that country, hence the ability to bring in, basically, what we can carry in order to see us through until our next trip. Not sure how well it will go down with other EU members if they try to regulate the amount of duty paid tobacco we can bring in? Hopefully, on this occasion, Brussels will intervene as it is grossly unfair that we should be paying as much tax as we are, when other EU countries can still sell 20 cigs for between £0.75 and £1.50!
It is about time they realised that bullying just does not work! With what they are charging for tobacco products here, it would still be cheaper to go to Europe several times a year to stock up.
My boss laughed today when I said I was popping out for a smoke, especially as I reminded him it is no smoking day and I make every effort to smoke a little more at these times!
Lyn, today might well be no smoking day, but when is "no drinking day?"
It isn't today or even next week, but I can see it happening, mark my words.
I blame the Government for the increase in underage drinking. We used to go to the pub for a drink or two, but the Government is doing it's best to deter us from going to the pub. It started with the smoking ban and the increase in tax will drive more parents to drink at home. It is said that children smoke when their parents smoke, the same must be said with drink. The more parents drink at home, the more children will find alcohol freely available at home.