Writing on his blog this morning, Chris Snowdon noted:
The tax on a packet of cigarettes will rise by about £1.30 today thanks to the tobacco duty escalator. If recent history is any guide, the Chancellor won't even mention it because smokers don't matter in Britain in 2023. They are second class citizens to be vilified while the state uses them as cash cows.
See: Open season on smokers (Velvet Glove Iron Fist).
Well, Jeremy Hunt did mention tobacco duty but in the most perfunctory way. "We will uprate tobacco duty," he murmured.
(Uprate? When did that replace 'raise' or 'increase'?)
For more details we had to wait until the publication of the full Spring Budget 2023 (or Red Book, as it's known) and there, hidden away on page 83, it reads:
Tobacco duties – Duty rates on all tobacco products will increase by RPI + 2%. The rate on hand-rolling tobacco will increase by RPI + 6% and the minimum excise tax will increase by RPI +3% this year. These changes will take effect from 6pm on 15 March 2023.
What that doesn't tell you is the rate of RPI (Retail Price Index), the measure of inflation used by government when 'uprating' tobacco duty.
And this is where it gets complicated because according to the Office for Budget Responsibility (OBR) the RPI is 12.7% but I have now been told that the tobacco duty increases are based on an RPI of 10.1%.
In other words, the duty will go up by 12.1%, not 15% or thereabouts, but don't quote me because I'm still trying to get confirmation.
(The Sun and Mirror are currently basing their reports on an RPI of 12.7%. I wish the Treasury could be clearer.)
Either way, it's a massive increase in taxation, especially as inflation is forecast to come down to 2.9% by the end of the year.
By then smokers could be paying duty that is 11% (not 2%) higher than inflation. If so, that's some escalator!
See: Price of cigarettes to rise above £14 from TONIGHT as tobacco tax hiked by nearly 15% (Mirror). It includes Forest's response:
Campaigners have accused the Chancellor of being "heartless and cruel" after Jeremy Hunt pledged to uprate tobacco duty.
Simon Clark, director of the smokers' group Forest, said: "Punishing smokers for their habit during a cost of living crisis is heartless and cruel.
"This is bad news for legitimate, law-abiding retailers, and bad news for the Treasury which could lose billions of pounds in revenue if more smokers buy their tobacco from illicit traders."
The Sun has also quoted us - Price of packet of cigarettes set to rise to £14.39 from 6pm tonight.
Update: The BBC has the best explanation here:
In the Budget, the chancellor revealed the duty rates on all tobacco products would increase by the Retail Price Index (RPI) of 10.1%, plus 2%. This means an increase of about 12%.
The RPI is a measure of inflation which came down to 10.1% in January.
According to the Office for National Statistics, the average price for a packet of 20 cigarettes in January 2023 was £12.84.
The increase in duty rates announced in the Budget means an average packet of 20 cigarettes would increase to £14.39 at 18:00 GMT on Wednesday.
Significantly it was not published until 7.00pm, which presumably is how long it took to clarify the details.
Not sure why the Treasury couldn’t have explained all this in the Spring Budget doc. Makes you wonder if they were being deliberately vague.