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Wednesday
Mar232011

Tobacco duty increase hits law-abiding consumers who use British shops

Forest's response to the increase in tobacco duty announced today by the Chancellor:

INCREASE IN TOBACCO DUTY PENALISES LAW-ABIDING CONSUMERS, SAYS FOREST

The smokers' lobby group Forest has criticised the Chancellor’s decision to increase tobacco duty by two per cent above inflation, arguing that it penalises "law-abiding consumers".

Director Simon Clark said: "Law-abiding consumers who buy their tobacco in British shops are being penalised unfairly.

"The policy also discriminates against those who can least afford it, especially the elderly and the low paid.

"Increasing tobacco duty could cost the government billions of pounds. The people who will benefit most are black marketeers and those who purchase their tobacco abroad."

He added: "The Chancellor said the government's policy on tobacco will reduce smoking. It's not the government's role to force people to stop consuming a legal product. That's social engineering, which we deplore."

Update: Expect an increase of 33-50p on a pack of 20 cigarettes, and around 67p on a 25g pack of hand rolling tobacco.

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Reader Comments (75)

So Belgium it is then. Very spiteful increase on hand rolling tobacco, it looks like an ASH cut and paste budget.

AMBERLEAF 50GR £ 3-90
CUTTERS CHOICE 50GR £ 3-90
DRUM 50GR £4-10
GOLDEN VIRGINIA 50GR £ 4-50
OLD HOLBORN 50GR £ 4-40

http://www.tobacco-alley.be/aboutus.html

Wednesday, March 23, 2011 at 14:44 | Unregistered CommenterDave Atherton

Well, that's nice then. A few more smokers will now be forced to go to the grey market, which, with the upcoming changes to cigarette packaging will make tobacco demand even more attractive to black marketeers. net result: less dosh for the treasury, more helath impacts from black market tobacco which commonly has 30 times the daily safe dose for lead (amongst other things)

Wednesday, March 23, 2011 at 14:50 | Unregistered Commentersmokey joe

This presents me with something of a dilema. Over the past 4 years I've steadily been going down to cheaper and cheaper cigs, and have just changed back to hand rolling tobacco, due to the cost. For a while now I've been on a knife edge between buying legitimate cigs or going the route of illicit, smuggled ones. I'm dead against funding the black market and consequently drugs, prostitution and other illegal activities and have tolerated these price rises, but this rise might just be what tips the balance.

I've looked on as friends and aquaintances have changed to buying contraband cigs despite my protesations about funding crime, and been called an idiot and worse for not doing it. Now I'll have to eat humble pie as I join them.

What a depressing thought it is that I'm reduced to this.

Wednesday, March 23, 2011 at 15:02 | Unregistered CommenterMalenfant

It seems the treasury is no longer concerned about loss of revenue from tobacco. The compounded increases (RPI+2%) this year and into the furture will result in the price becoming astronomical.

As the price increases the tax take will decrease. Is this a mechanism for taking tobacco tax revenue out of the budget equation? Is it designed to effectively wean the economy off tobacco money to the point where it is no longer needed and thus is it paving the way to prohibition?

These tax increases are very regressive. As studies have shown, low income groups smoke the most so they will be affected the most. These measures will just add to their problems. Of course Man with a Van will step in. So they have will have a plan to reduce smuggling etc adding to costs.

So what seems to be common-sense, reduce the tax which would reduce the need for smuggling and also increase tax take, go out the window. None of what is happening makes any sense unless the end point is prohibition.

Wednesday, March 23, 2011 at 15:25 | Unregistered Commenterwest2

DaveA. I now buy Belgian tobacco. Springfield costs £2.70 for 50 gms.
2% above inflation will cause an increase in counterfeit cigarettes in the UK. Counterfeit cigarettes are far more dangerous than those bought in Belgium and the UK. An increase in people smoking counterfeit cigarettes will put a big burden on the NHS while the Government will receive less in duty.

Wednesday, March 23, 2011 at 15:25 | Unregistered Commenterchas

One only has to visit Adenkirk in Belgium to see just how much revenue is being lost to the Treasury, at any given time there's literally hundreds of people buying untold thousands of pounds worth of Baccy. . Personally I haven't bought Baccy in the UK for over a decade. The Belgium shopkeepers must be jumping for joy, the smugglers even happier and the fake Fag/Baccy producers rushing off to order their new yachts.

Wednesday, March 23, 2011 at 15:28 | Unregistered Commenteroceaneagle

To be perfectly honest, I don't personally know anybody who still buys their tobacco products in this country. There are some obviously, as I do occasionally see the odd person buying a pack of cigarettes in my local corner shop, but these seem very far and few between.

As for making people rush out and buy contraband and counterfeit cigarettes, I can't see that happening either. Where do we all find these so called contraband and counterfeit cigarettes? A number of years ago, I used to see a few seedy looking characters, offering cheap cigarettes in Brick Lane, but from what I heard, the police or market inspectors, soon put a stop to that, and they seemed to disappear overnight. Other than that, I wouldn't have a clue as to where to buy such "cheap" products, as I am sure most people wouldn't.

Of course I don't agree with the tax hike, who would, apart from nutters like ASH? But there again, none of us has ever agreed with price increases on alcohol or fuel, or road tax, which, along with tobacco, have been the main targets of Government tax increases in every budget, of every year, for as long as I can remember.

There has been a great deal of speculation lately, that cigarettes would sooner or later, be banned outright. I think this latest tax increase on tobacco, shows that speculation to be completely unfounded. Governments of all persuasions need the tax they collect on tobacco too much to ever contemplate banning it.

Let's face it, did anybody really think the duty on tobacco would be lowered today? Forget about it, and carry on as before, having one or two, or maybe three trips abroad each year, and buying all your supplies there. Spain might have now brought in their own silly smoking-ban, but we can still buy tobacco products there at prices far below what you can here.

Wednesday, March 23, 2011 at 15:36 | Unregistered CommenterPeter Thurgood

Simon, why haven't you put anything at all in your response about UK citizens going to the EU to legitimately purchase their own tobacco/cigarettes? Surely you should advise UK citizens to do this?

Not only by taking this action is the UK Treasury hit where it hurts but it also stops smuggling. Why buy off 'white van man' or 'Chineses counterfeit gangs' when one can legitmately buy ones tobacco/cigarettes abroad and hence starve these aforesaid criminals of cash?

That is the only response that the UK Gov will take note of. No -one should ever buy any tobacco/cigarettes in this country ... period!

l await your response.

Wednesday, March 23, 2011 at 15:42 | Unregistered CommenterSmoking Hot

as usual it is the poorer members of society that suffer, tobacco products, alcohol and petrol are the easiest way for the government to obtain more revenue, like wage increases the percentage increased effect those on less money more than the middle/higher income groups, it may look more on paper but an increase of 2% above inflation (whatever that is at the moment) means a lot less money in the pockets of pensioners or the millions now unemployed due to this governements other policies. Oh for the money to be able to go abroad for cheap fags and tobacco

Wednesday, March 23, 2011 at 15:42 | Unregistered CommenterPauline

@pauline ... it is not expensive and the money you save pays for the trip which still leaves you 60% better off than purchasing in the UK. P&O feriies from Hull to Belgium ... 2 for £45.00!

Wednesday, March 23, 2011 at 16:02 | Unregistered CommenterSmoking Hot

@peter
Noted:There has been a great deal of speculation lately, that cigarettes would sooner or later, be banned outright.I think this latest tax increase on tobacco, shows that speculation to be completely unfounded.
I suggested that this tax increase would lead to a reduction in tax take. Why would HMG do that?

Noted:Forget about it, and carry on as before, having one or two, or maybe three trips abroad each year, and buying all your supplies there.
That may well be feasible for you. Others may not be in a position to do that (for reasons unrelated to cost).

Noted:But there again, none of us has ever agreed with price increases on alcohol or fuel, or road tax,
Of course we all moan about taxes. In the case of tobacco it has become totaly disproportionate (sp?). The additional tax is no longer to cover health costs, it has become a coercive mechanisn and paradoxically seems to be putting cigarettes into an elite bracket.

Wednesday, March 23, 2011 at 16:02 | Unregistered Commenterwest2

I agree with you west2 but as I said, this has always happened, and it always will. Smokers are the Government's cash-cow, the same as motorists. We have two options, give up or go abroad and buy, which most of us already do.

One problem which I do foresee here, is that if we shout too much about the saving we make buying abroad, the Government (any Government) will surely clamp down on that, as they have done in the past, and limit the amounts one is allowed to bring back!

Wednesday, March 23, 2011 at 16:17 | Unregistered CommenterPeter Thurgood

@Peter ... it never worked in the past. lt's EU law, that's why they put up the guidelines from 800 cigarettes to 3200 and even then it's only a guideline ... nothing more.

Wednesday, March 23, 2011 at 16:36 | Unregistered CommenterSmoking Hot

So yet again the condemnation takes on board ASH's policies hook line and sinker. Even ASH admit that jacking up tax on cigarettes is regressive because it hits the poor hardest - so what happens - the price of cheaper cigarettes rises disproportionally, forcing those who buy cheaper cigarettes (because they can't afford more expensive ones) to more likely than not turn to the black market. Same for the RYO consumer. Add this to the display ban and the plain packaging consultation and what have you got? A black market paradise!

Wednesday, March 23, 2011 at 16:37 | Unregistered CommenterBeggarsBelief

People on low fixed incomes will have to find the extra out of their food budget and smoking will kill due to malnutrition.

Wednesday, March 23, 2011 at 16:39 | Unregistered CommenterJoanne Telfer

Chancellors .... tobacco ...... taxation .... hardly a new innovative policy. What else would you expect from a pig but a grunt?

Wednesday, March 23, 2011 at 17:04 | Unregistered CommenterMike N'thants

So the differential on RYO will be touching a full £10 per 50g - even if one sticks to UKBA guidelines for the amount brought back, it's still a saving of over £500. And that's not taking into account the money saved by buying wine and beer while you're over there.

Wahey! The booze cruise is back in fashion. Cheers, Osborne.

Wednesday, March 23, 2011 at 17:44 | Unregistered CommenterDick Puddlecote

Smoking Hot. The French are only allowed to bring back 200 cigarettes from Belgium and Spain.

Wednesday, March 23, 2011 at 18:00 | Unregistered Commenterchas

@Joanne - that's the aim and then they can promote the lower paid as child abusers et al as well. They are easy to bully.

Join the Resistance. Buy your tobacco abroad and stop funding Denormalisation.

@Peter Thurgood. I agree it is only a question of time before they prevent us from going abroad and then I will grow my own. I intend to start this summer. But what I reallly, really, fail to understand is why people like yourself continue to support this Govt when on this issue and many others it is the same as the last and those where it differs are policies pinched from UKIP's manifesto - the only party to offer to REAL change and an end to denormalisation.

Wednesday, March 23, 2011 at 18:04 | Unregistered CommenterPat Nurse

The ASI have commented on their blog, Simon.

The government will raise the tax on cigarettes.

“Delaying the travel duty was a recognition that some taxes bite harder than others. Cigarette taxes are no different. "Sin taxes" may be effective revenue tools but only because, for many, they are a tax on fun. They’re regressive and hit the poorest the hardest. In tough times like this, the Chancellor should spare us the grim paternalism of the sin tax and allow people some small pleasures in life. Britain’s high tobacco taxes encourage illicit trade, with smuggled and counterfeit cigarettes now making up a significant part of the market. Today’s budget will only compound that problem.”

Wednesday, March 23, 2011 at 18:11 | Unregistered CommenterDick Puddlecote

Hang on, Dick, wasn't Arnott arguing only a few weeks ago in the Graun that there's little correlation between high tax and high smuggling - what on earth's going on?

Wednesday, March 23, 2011 at 18:42 | Unregistered CommenterJoyce

Idea Simon:

Why not arrange a Forest tobacco and booze cruise to Belgium. People who cannot afford the trip can pay Forest back weekly as they make their savings.

Win, win, win, in my opinion.

Wednesday, March 23, 2011 at 18:45 | Unregistered CommenterDave Atherton

It's the Adam Smith Institute, Joyce. They have a far better grasp of economics than Arnott. ;)

Wednesday, March 23, 2011 at 18:45 | Unregistered CommenterDick Puddlecote

...really must clean these specs :))

Wednesday, March 23, 2011 at 18:50 | Unregistered CommenterJoyce

I’ve never quite understood the logic of “sin taxes” in any case. Unless a government is self-disciplined enough to keep specific “sin taxes” for specific “sin-tax related” purposes (which none have ever been) how can they not see that ultimately they will become hugely dependent on people continuing with the “sinful” activity which they say they are so keen for them to stop? Yes, West2, maybe these incremental increases are designed to wean governments themselves off the weed, but it seems pretty short-sighted to try and do this by increasing the amount of tobacco-money they’ll be getting, rather than decreasing it. It’s a bit like an alcoholic trying to give up alcohol by drinking whisky instead of beer, because there's less of it!

Wednesday, March 23, 2011 at 18:50 | Unregistered CommenterMisty

Five and twenty ponies,
Trotting through the dark -
Brandy for the Parson, 'Baccy for the Clerk.
Them that asks no questions isn't told a lie -
Watch the wall my darling while the Gentlemen go by !

Wednesday, March 23, 2011 at 18:54 | Unregistered CommenterMartin V

@ Dave Atherton ... l'd go on such a trip just for the hell of it.

Wednesday, March 23, 2011 at 18:54 | Unregistered CommenterSmoking Hot

Dave - that's one excellent idea. I, for one, would jump at the chance. At the moment, having just digested Simon's .post, I'm facing the prospect of having to give up smoking. I'd much rather carry on smoking (slap in the face for ASH) but deny HMG its cut - and be able to meet the extortionate costs of self-employment.

Wednesday, March 23, 2011 at 18:59 | Unregistered CommenterJoyce

@ Chas ... l don't know of one Frenchman who doesn't get his tobacco cheap. lndeed even our dear Anna Raccoon is known to go shopping. :)

Wednesday, March 23, 2011 at 19:04 | Unregistered CommenterSmoking Hot

[quote]Smoking Hot. The French are only allowed to bring back 200 cigarettes from Belgium and Spain.[/quote]

Rubbish! There is absolutely no enforcement on the borders people come and go as if they were going from Buckinghamshire to Oxfordshire. I did my annual Belgium Baccy run a couple of weeks back and noticed many Froggies also stocking up.
The return fare for the vehicle was £19 Dover-Dunkirk. Then a 20 minute drive into Belgium. Two of us brought back 40 Cartons of Baccy plus some fags.

Wednesday, March 23, 2011 at 19:05 | Unregistered Commenteroceaneagle

misty wrote it seems pretty short-sighted to try and do this by increasing the amount of tobacco-money they’ll be getting, rather than decreasing it

Others have made similar remarks and elsewhere it was stated HMG stood to gain from the increases.

What I am suggesting is that the government may have arrived at or past the point of increasing returns. This has happened (if my memory serves me correctly) in New York where, after a tax hike, there was a decrease in expected tobacco tax revenue. This was a bit of a shock as a number of state programs were funded by smokers. The point is well made that governments should not hitch needed funding to tobacco sales. I am unclear whether the HMG do this though.

Given the number of comments suggesting switching to non-UK duty paid sources, wouldn't this indicate the possibility that tobacco tax revenue will fall? There comes a point where tobacco is or will no longer be 'cash cow'. Politicians are the last to realise this (as in NY).

Wednesday, March 23, 2011 at 19:10 | Unregistered Commenterwest2

Given the blatant evidence of the influence of ASH on not only the recently fanfared Tobacco Control Policy but now the budget in relation to the tax hike on cigarettes (which will hit the poorer smokers hardest as they tend to buy the cheaper cigarettes) isn't it time for some organisation to make a Freedom of Information request for all relevant correspondence between ASH and the DoH/ Treasury and a list of meetings between ASH (and their advisors etc) and these Government Departments, including a note of who was in attendance at such meetings?

Wednesday, March 23, 2011 at 19:27 | Unregistered CommenterBeggarsBelief

French law limiting the transport of tobacco. A recent French law has effectively outlawed tobacco tourism which uses France either as a destination or as a route.[1] Under pressure from the tobacco sellers interest group, les bureaux de tabac, and despite the resistance of the French Government, the French Parliament has enacted a law that makes it illegal to transport more than 200 cigarettes whilst in French territory [2]: fines and confiscation are sanctions if a person is found to be in possession of more than 200 cigarettes whilst traveling through/in France. The law is designed to prevent French citizens buying tobacco in Belgium and Luxembourg. Following recent tax increases in France it has become more attractive for French citizens to buy tobacco in Belgium and Luxembourg. The law also applies to citizens of other European countries traveling through France with more than 200 cigarettes in their possession. There is a suggestion that the law is incompatible with European Commission directives which demand freedom of movement and goods, for personal use, across the borders of European Union countries excluding specifically named "new member states".

http://en.wikipedia.org/wiki/Booze_cruise

Wednesday, March 23, 2011 at 19:56 | Unregistered Commenterchas

Haven't paid a cent in tobacco duty for a year now. Only person I know who is paying UK duties is my 82 year old mother-in-law who has dementia. Never mind, it comes out of her disability living allowance. We do live in a strange time.

Wednesday, March 23, 2011 at 20:13 | Unregistered CommenterThe Artful Dodger

The government and Ash are pushing people into poverty and black market cigarettes.
It is truly disgusting and in reality means that poorer families will havel ess to spend on food.

Wednesday, March 23, 2011 at 20:18 | Unregistered CommenterMark

My only concern is that smokers will become increasingly marginalised as, when they look at the sales figures to work out how many smokers there are in the country, they will find there is only one person who has a 10 day habit!

I currently have people buy me fags when they go abroad which means I only buy 60% or so of my fags in the UK. If prices get even more silly then I will certainly start taking visits abroad specifically to buy fags. I could do without it as I have two jobs and pay inordinate amounts of income tax to the State, and would otherwise be working. But so be it. I will not have the p*** taken out of me and I will not fund ASH's campaign of hatred and denormalisation.

Wednesday, March 23, 2011 at 20:40 | Unregistered CommenterMr A

The disproportionate uplift in the prices of cheaper brands can only be seen in the context of an attempt to set a minimum price for cigarettes much along the same lines as anti-alcohol campaigners are lobbying for a minumum price on alcohol. What they are esentially saying to the less well off in society is "We know what's best for you so we are going to price you out of the market" Actually more like "we are going to price you out of the legal market" . Same applies for the uplift in tax on hand rolling tobacco. Really does beggar belief!

Wednesday, March 23, 2011 at 21:50 | Unregistered CommenterBeggarsBelief

According to Deborah Arnott it could have been much worse.

"Currently the Government has in place a tax escalator of 2 per cent above inflation from 2011 to 2104. ASH and the UK Centre for Tobacco Control Studies, endorsed by 68 health and welfare organisations, have campaigned for this to be increased to 5 per cent above inflation.

Whether the Government has been persuaded by this campaign will be revealed in the budget announcement on 23 March."

"Reducing affordability also requires cracking down on the sale of cheap and illicit tobacco."
http://www.fctc.org/index.php?option=com_content&view=article&id=522:new-tobacco-plan-for-england&catid=257:opinion-pieces&Itemid=214

2104? They do seem to think ahead.

Wednesday, March 23, 2011 at 22:59 | Unregistered CommenterRose2

What a mess he's made.... by following the anti-smoking, prohibitionist brigade, Osborne has obliterated the growth that the country so desperately needs.

I, like millions of others, will continue to deny this country of my weekly spend on hairdressers, taxis, clothes, make-up, handbags, shoes, perfume, countless draw tickets, entrance fees, on-sale alchohol and tobacco. Goodness knows how many businesses that effects, but why on earth should I (and millions like me) support a government and do as they say, ie spend in this country, when they choose to denormalise me.

No thank-you. I will continue to spend my money elsewhere and support those that treat me as a normal human being.

By the way - I can't remember the last time I bought tobacco in this country either. There's no way that I will ever consider participating in extortion. It's day-light robbery as far as I'm concerned and I pity those who have no alternative other than to pay these inflated prices.

Wednesday, March 23, 2011 at 23:31 | Unregistered CommenterHelen

@ Chaz ...that regulation ain't happening despite what Wiki put on their site ... not for French citizens and not for EU travellers either.

Wednesday, March 23, 2011 at 23:34 | Unregistered CommenterSmoking Hot

Yeah, c'mon Simon. Dick Puddlecote is providing transport and time-off for his staff to shop for their tobacco in Belgium. FOREST should organise a trip and get the media onboard.

Wednesday, March 23, 2011 at 23:47 | Unregistered CommenterMick

Simons liink to Telegraph .... shows headline of £7 for a pack of cigarettes but unfortunately they show a pic of a pack of 10. Go Teletubbygraph! :)

Thursday, March 24, 2011 at 1:12 | Unregistered CommenterMick

Time, perhaps, to think about setting up our own tobacco-growing co-operatives - especially now that we've lost Virginia (thanks to blinkered, greedy, and corrupt government) ?

The climate is near-perfect, and the excise men seem reluctant to enforce the EU Directive from 2001.

And, no - I'm not joking.

Thursday, March 24, 2011 at 2:12 | Unregistered CommenterMartin V

Here is why Osborne can confidently predict an increase in tax revenue from the tax hike:

£10 billion in tax revenue.
20 million smokers.
Equals £1.37 per day on average tax take per smoker which equals about 7 fags per day.
Therefore, on average, most smokers smoke very few cigs each day, and so it is not really worth their while to take trips to Belgium. Thus, for most people, demand is inelastic. Thus, they will just carry on as usual - buying a couple of packets per week and put up with the increased cost. This is the calculation that the Gov makes. (They are not really interested in the Health Aspect - ASH and co are useful tools which justify increased taxes, which, I suspect is the reason that the Gov does not cull them)

However, there is a tipping point. My tipping point occurred several years ago. I smoke a lot, so I started buying my fags in Spain. Even Spain is now not so attractive, so I have just been to Prague where I bought fags at £2.50 for 20. And, just in case the Gov limit the amount that I can legally import, I am also growing my own. The seeds have been sown and have germinated. I expect a good crop this year and will cure the tobacco over the winter. I see no problem.

As has been said, it is the poorest people who will be hit hardest, and they are the people who will be attracted to 'white van man'. The Gov will not be able to do anything about this because it is not dissimilar to 'a cash job' (avoiding VAT).

There is also a huge misconception about 'fake' fags. Counterfeiting is only about creating packaging which looks like the original. Beware of statements which suggest that the actual tobacco is fake.

Finally, I am not sure that the display ban and plain packaging are of any importance at all. The really important thing is the smoking ban. Not much else matters.

Thursday, March 24, 2011 at 2:48 | Unregistered CommenterJunican

@oceaneagle

What would be the cost of a single person going to Belgium by car getting the full entitlement of pipe tobacco?

Thursday, March 24, 2011 at 2:50 | Unregistered CommenterJJ

I've no idea why you lot are surprised. I, certainly, expected large increases in fags and booze due to the rubbish position the country's in. They've always been an easy target. What I did, and still do expect alongside this, (although, tbh, not until at least 2012) is an amendment to the smoking ban. It is still the mother of all this anti business and still the target. Junican is correct. Plain packaging and display bans are an irritation but liveable with. SHS is the enemy.

However, on the principle of trust in God and keep your powder dry, atm, I'll still be voting for UKIP.

Thursday, March 24, 2011 at 7:04 | Unregistered CommenterFrank

Yes organised Forest trip to Belgium. Great idea!!! When we going ?

Thursday, March 24, 2011 at 7:21 | Unregistered CommenterPeter James

I've read the comments with interest and astonishment. Where, pray tell, are all these white van men? And how on earth do you manage to go on all these trips abroad? I am a self employed widow, and I couldn't afford to pop over the channel once a fortnight to buy supplies, neither have I the essential contacts to ferret out contraband. I shall just have to content myself with, as usual, moaning about the government and immuring myself in my house because I'm not allowed to smoke anywhere else.

Thursday, March 24, 2011 at 8:44 | Unregistered CommenterLesley

FOREST up for this baccy trip or not?

lf not, why not?

Thursday, March 24, 2011 at 9:22 | Unregistered CommenterMick

@Mick

A booze cruise to Belgium with the numbers involved needs a lot of thought and planning. It is really an informal idea/discussion.

Thursday, March 24, 2011 at 9:48 | Unregistered CommenterDave Atherton

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