Raising tobacco duty won't help
Tuesday, June 22, 2010 There appears to be a general assumpton that duty on alcohol and tobacco will go up by five per cent or more in today's Budget. Tobacco, in particular, looks vulnerable because non-smokers (the majority) are unlikely to complain if smokers (the minority) are hit hard in the pocket.
Certainly, it should give us a good idea which way this government is going to go on tobacco control. A large increase in tobacco duty may be dressed up as an economic necessity to help reduce the deficit but the truth is rather different. In fact, a sharp increase in tobacco duty is more likely to result in a net loss to the Treasury because more and more people will buy their tobacco abroad - or find other more illicit sources.
Anyway, I've just done an interview for Talksport on the subject.
PS. Let's not forget that tobacco taxation has already gone up this year. Any increase announced today will be in addition to the increase announced by Alastair Darling in March.
Simon Clark
From your correspondent in the Long Room at Lords: no increase in tobacco or alcohol duty. That's the Tories for you. Cheers (hic)!
Reader Comments (29)
It's now got to the stage where any further increases in alcohol duty will also be counter-productive in terms of total revenue.
We all know that alcohol and tobacco will be hammered today, the question is by how much? ASH, I believe, are asking (or telling) Osborne to raise tobacco duty by 10% or more. How much are fake charities like alcohol concern asking, (telling?)
It's a double edged sword really isn't it.
If Osborne increases tobacco duty by a heft percentage, he will be hammered by the pro-smoking lobby, and if he goes easy on tobacco, he will be hammered by the "so called" health lobby.
One way or another he has to start getting our economy back on the right foot once again, and no matter what way you look at it, someone has to get hurt.
It's no good complaining today about the inevitable increases, we all had plenty of time, 13 years in fact, to complain to the real culprits that have caused all this, and even then, at the GE, they still not got in again.
We, the people of this country, helped cause everything that is wrong with this country, and today we are going to start paying for it.
That should be "they still nearly got in again"
Woo-hoo - more cheap trips abroad for me. I will not put one single penny into the tobacco tax man's pocket in this country for it to be used to further persecute me.
'We, the people of this country, helped cause everything that is wrong with this country, and today we are going to start paying for it.'
Sorry Peter but I do not agree with your statement. We the people did not lend billions of pounds to the unemployed of Lousiana, package up the loans and sell them on to our own pension funds.
We the people did not deregulate the City of London to an extent that the foxes were running the henhouses, making multi million pound fortunes from buying and selling ever more complicated financial instruments.
We the people did not decimate the manufacturing industry so when the 'house of cards' collapsed there was no one actually left making anything.
We the people did not dole out huge sums of money to unelected quangos so they could argue with each other on Channel 4 news.
We the people did not invade Iraq and Afghanistan which has cost £20 billion pounds already, not including the life time care costs of the injured or just the loss of lives.
The list is endless but the Tories are trying to make us all feel responsible for actions that go back to the Thatcher days and continued through Blair and Brown. We are not responsible and we have a right to complain because we are having to pay for mistakes of the last 30 years and not just the last 13.
Rubbish Michael.
"we the people" are the electorate who voted Labour in, and then voted again and again for them. It might not be you personally, and it most definitely wasn't me, but it was the people of this country as a whole.
The quangos and other waste that you have mentioned all happened under Labour rule, so why try to swing that onto what happened in the 17 years before that?
You want to find a scapegoat, then look no further than the mirror.
You the people, Peter, voted in Tories who have absolutely no intention of doing a damn thing for smokers. Blue Labour or NuLabour makes no difference. You have voted in the same party
The Tories might not have any intentions of doing anything for smokers Pat, the jury's still out on that one for the time being, but I wasn't answering Michael on just the smoking issue, we were debating the budget as a whole and the pain that it is going to cause a great deal of people in this country, and who is ultimately to blame for that pain.
Chancellors speech live on the Telegraph....
13.17 No new increases in alcohol, tobacco or fuel duty.
Interesting.
Oh dear Specky, who will the Tory bashers lash out at now?
Taken from ConservativeHome just now.
Now let's hear the dissenters???
FINAL WORDS: This is a budget where the rich pay the most and the poor are most protected.
Final announcement is £2bn extra tax credit for low income families with children. Clegg nods vigorously.
State pension will be linked to average earnings again or 2.5% increase or prices - whatever is larger - by next April.
Income tax personal allowance to increase by £1,000 to £7,000 this year and eventually to £10,000.
From midnight higher earners will pay 28% CGT. No tapering as suggested by Tory rebels.
Council tax will be frozen for one year from April.
No increased duties on 'sins', eg petrol, smoking, alcohol. Cider duty hike planned by Labour is scrapped. This will help us "celebrate" England's progress to Quarter Finals or to "drown our sorrows".
Peter I am not saying that it was all the Tories fault or that Labour were not at least as responsible. What I am saying is that we are having to pay for decades of mistakes by politicians of all persuasions and it is not our fault.
The main cause of the current worldwide financial meltdown is the actions of the banks. Deregulation started with Thatcher's 'Big Bang' and Labour could not ingratiate themselves enough with the crooks and spivs in the City of London.
I, as a taxpayer who receives absolutely no benefits from the government, will now be hit with higher VAT and National Insurance payments. I will already be clobbered with alcohol, tobacco and fuel duty increases announced by the previous government and my question is why am I not allowed to complain about this?
I, and millions like me, did not benefit from the rampant greed of the City but we are expected to pick up the tab. It was not my fault and I will not be persuaded by any government that somehow it was.
Ash and Alchohol concern maybe next, no more public funding.
Please Please Please.
"...pain that it is going to cause a great deal of people in this country, and who is ultimately to blame for that pain." Fair comment, Peter. And I'm slightly encouraged that tax on cigs is not rising!
'Now let's hear the dissenters???'
'Final announcement is £2bn extra tax credit for low income families with children. Clegg nods vigorously.'
Will not cover the increase in the cost of living as a result of the rise in VAT which by the way comes in first. The lowest income families suffer the greatest from VAT.
'State pension will be linked to average earnings again or 2.5% increase or prices - whatever is larger - by next April.'
His party abolished the link and now he is claiming credit for restoring it!!!!
'Income tax personal allowance to increase by £1,000 to £7,000 this year and eventually to £10,000.'
The rise in employee national insurance contributions wipes this out never mind again the VAT hike.
'From midnight higher earners will pay 28% CGT. No tapering as suggested by Tory rebels.'
Immediate tax rises but any cuts are delayed until at least next year and can always be cancelled later. Also, by ignoring taper relief it penalises those who invest over a long time and benefits the gamblers in for a short term kill.
'Council tax will be frozen for one year from April.'
This could lead to cuts in local services and while council spending should come down, this headline grabbing move will cause short term havoc and was clearly ill thought out.
'No increased duties on 'sins', eg petrol, smoking, alcohol. Cider duty hike planned by Labour is scrapped. This will help us "celebrate" England's progress to Quarter Finals or to "drown our sorrows".'
Labour already increased duty in their last budget so Osborne could hardly hit us again. The reduction in cider duty is to be welcomed but his comments about coming back and taxing other things that 'bingedrinkers' drink smacks of the same nannyism as before.
I see that the banks who caused this crisis in the first place will be hit by a £2 billion pound 'levy'. Us poor saps who work and pay taxes will be hit by a £13 billion increase in VAT.
Count me as a dissenter.
The budget Michael, isn't about nit-picking, and guessing what might happen if.....It is about reality.
If someone in one's family has been overspending and using our credit cards to their hilt without telling us, then when we do find out the true extent of our debts, we have to take action. We have to draw in our horns wherever we think necessary, and that is exactly what George Osborne has done, after he found out that our juvenile delinquent son, Gordon, had just about sent us bankrupt. He even sold the family jewels!
If George Osborne went along with your predictions, we would be in exactly the same position as we were when we had the juvenile delinquents in charge, and within a few more months, we might well of ended up like Greece, or like the way Spain and Ireland are going.
With no family jewels left to sell off, the only thing left for Gordon to sell, would have been our country. He already gave away so much to Europe, he would undoubtedly signed away what was left of the UK to them.
This way, things are going to be tough, there is no doubt about that, but at the end of the day, we will have our country back again, with a strong professional Conservative Government, not a lame excuse for a government, which was all Labour was.
The banks by the way Michael, did not cause the crisis in the first place. They admittedly did not help, but our Labour Government caused the crisis in this country. Practically all of Europe are in some sort of crisis, but we ended up under Labour in the worst position out of all of them.
Please, please, please let it only be a matter of days before I hear, "All funding to ASH and Alcohol Concern has been cut". PLEASE! I can take anything the Budget has to throw at me, but that would make it all so worthwhile.... Just the justice of it.... Even now I pray that day will come soon....
"We are not responsible ..........................."
Was the ambiguity intentional there, Michael ?
Yes. Very, very interesting - intriguing, in fact - that duty on tobacco and alcohol wasn't increased. Even more interesting, I thought, was the comment that the duty on alcohol would be looked at again in the Autumn (ostensibly because of "binge drinking") but no mention of the same for tobacco. It's becoming a little clearer every day who the "whipping boys" of this new Government are likely to be ...........
I do not understand Martin V what you mean.
There is no intention to be ambiguous and I am saying we as in 'we the people, are not responsible for this mess yet we are being punished. In addition, somehow we are being led to believe that it is our fault and we should feel happy that George Osborne is going to sort the mess out.
Peter.
I have not been making predictions but if I were I think taking £113 billion from the economy will be disastrous and while I support a reduction in the State, this has to be phased properly as no private sector can grow in such a short space of time particularly when the economy is being squeezed.
The kind of people who are being told to 'pull in their horns' are the nurse on £30k per year. She will see her wages and child benefit frozen and her tax credits removed. In addition, she will see the full duty rises and then be hit by VAT increases which are on top of the duty rises.
Some people here are missing the point about no increases in duty on fags and booze. Labour already increased them and the VAT increase will be added on to the higher price so it was a backdoor way of further duty increases. For example, for a publican to pass on the VAT rise , maintain his margins and meet his new increased bills, a pint of beer will increase by at least 10p.
How can you say Michael, that you are not making predictions, when you end with your personal take on a publican passing on the VAT rise, by increasing the price a pint of beer by at least 10p?
Not all price increases have to be passed on you know. I know from personal experience that when I have sometimes been faced with situations such as this (in my personal life) that my first inclinations are very similar to those you are expressing, of doom and gloom, and there's no way out of this etc etc.
I used to own a wine-bar/restaurant in London, and often had to face price increases, and decide how I was going to deal with them. If I decided to pass them on I knew I would ultimately lose customers, and I knew that if I just tried to absorb them, I would of course end up losing money, so I used my brain instead, and found ways around the problem.
My first port of call would be the wholesaler, to ask him if they could offer me a better deal, second was to work within the new price, and hope that by doing so, I would sell more drinks, and ultimately increase my profits (as supermarkets do), and lastly, was to work harder myself. At the end of the day, I never lost money.
As for your prediction that nurses on just £30k per year will see their wages and child benefit frozen and their tax credits removed, along with additional VAT increases which are on top of the duty rises. I am sorry Michael but I cannot agree with you at all on this. I am sure that there are some nurses that do earn just that, but in December 2008 the Sunday Times reported that a NHS nurse had broken the £100,000 barrier for the first time. The nurse consultant in Rotherham, South Yorkshire, had doubled her basic salary of £50,000 by working overtime under an NHS initiative to bring down waiting lists, according to the report. The newspaper said that figures it obtained under the Freedom of Information Act suggest many NHS nurses now earn more than £60,000 a year.
Facts are we all need to face up to Michael, not wild predictions of what might be, especially now, when Labour's lies and mishandling of our economy have finally come to light.
Peter. The VAT increase is pernicious and will force more companies to go bust and impact severely on the lower income families who pay a higher percentage of their income in VAT than the higher earner.
The country is just starting to recover and if small businesses try to absorb the increase many will not survive. As you are well aware the pub industry is on its knees as a result of the smoking ban and if landlords are expected to absorb a 2.5% increase in VAT they will just fold. Many landlords are earning less than the mnimum wage and are already working more hours than anyone should because they cannot afford staff.They are caught in a catch 22. Absorb the increase and go bust or pass it on and see the remainder of their clients go to ASDA. Either way this increase will be the deathknell for many more pubs and other small businesses.
I accept there is a problem irrespective of who is to blame. However, I would be looking at other ways of saving or raising money rather than targetting low income families and putting a final nail in the coffin of the pubs.
I don't know where you get your "facts" and "predictions" from Michael, but they are just 100% wrong. Please have a look here
"I do not understand Martin V what you mean."
Michael -
That was a JOKE !
And I'm NOT going to explain it.
Oh, sod it:
'Responsible' as in BLAMEWORTHY ?
Or,
'Responsible' as in CAPABLE OF MAKING SENSIBLE DECISIONS ?
In view of NuLab's predilection for dictatorial nannying........................
I dunno.........................................
"Just" £30k?? I don't know how much everyone else earns round here but I'd settle for that!
I agree with Michael Peoples, the latest buzz words of govts, new or old is that its 'the people's fault' for the state we're in. Its their get out clause for hammering us with more taxes by making the plebs feel guilty by telling us we all went mad with 'their' false money just because we believed what they told us, that the rainey day would never come again.
However, the people in southern ireland are culpabable in this instance, when the same corrupt shower were voted in again at the last elections when the signs were already there, and who are now trying to pin the blame on us 'the people' for taking the money. This same shower have now passed a bill to reduce the drink driving level to 50ml and its expected to be passed in the coming months. We can now kiss goodbye to the remainder of the rural pubs.
But the new british govt are below the belt accusing 'the people' in this instance, when it was the reason they were elected in the first place. Just goes to show they're all the same, and to make things worse their disastrous increase in vat to 20% means that it will but an end to the cross border shopping, which puts an end to my cheaper fags and medication and a good day out. F**k em!
Mr Brussels is sure starting to rule OK 'going forward' to the one world order!
Peter.
The link you provide is broken but seems to lead to a Tory site which is hardly impartial. However, you say my predictions are wrong but what about these people?
http://www.independent.co.uk/money/tax/hike-in-vat-will-hit-consumers-at-the-tills-in-pubs-and-at-the-pump-2007786.html
As you can see CAMRA are saying 10p a pint and pub closures will increase. Not only that the VAT increase will add 12p to a packet of cigarettes so smokers have not been left alone.
Not my predictions. FACTS.
Michael,
You lose any form of argument, when you start dismissing a link that I provided you with (which admittedly was not working properly) as a "Tory site" and "hardly impartial".
Firstly, if you did not see the "chart" that I was hoping you would see, how do you know who actually produced it? Just because it was reproduced on a Tory site, does not automatically mean the Conservatives produced it or commissioned it.
To dismiss something like this for that sole reason, is as bad as the likes of ASH dismissing everything and anything that the tobacco industry might commission or back.
You then point me towards other sites, which seem to be saying very similar things to what you have been saying. But Michael, once again these are nothing more than predictions, or assumptions, based upon what these people and yourself, think might, or could happen, they are therefore, not FACTS!
A fact is an event known to have happened or known to have existed.
A statement or assertion or verified information of something that has happened
A concept whose truth can be proved.
A piece of information about circumstances that exist or events that have occurred
Your predictions and assumptions Michael, just do not fit into the FACT category. When, and if any of your assumptions/predictions do come true, then you can present them as FACTS. Until that day you cannot.