Tobacco taxation: survey highlights effect of government policy

The following won't come as a surprise to readers of this blog but it's interesting nonetheless.

According to the Tobacco Manufacturers Association:

A survey of over 12,000 adult smokers released today reveals how consumers avoid paying the excessive taxation on tobacco products in the United Kingdom.

It found almost one third (29 per cent) of smokers are now buying tobacco products from ‘non-shop sources’ due to the excessive costs in the UK. The term ‘non-shop sources’ refers to purchases from abroad, online, from friends of family, in pubs, in the street, at car boot sales, in vans, at work and in ‘fag houses’ (private houses selling tobacco).

This surge in ‘non-shop’ sources has caused the Treasury to lose an estimated £2.1 billion of tax revenue every year because of the shift to non-UK duty paid products. A further £500 million is lost to cross border shopping each year. Collectively, this is the second largest loss to the Treasury after VAT avoidance and could have funded more than 110,000 additional police officers.

The survey found that the primary reason smokers were buying non-UK duty paid products was due to the high prices in the UK – the highest of all 28 EU member states.

Almost one in five smokers (17 per cent) now regularly buys their tobacco from abroad to avoid paying UK duty and eight in ten (78 per cent) smokers said they had no objections to buying non-UK duty paid tobacco as long as it was from a legal source.

Eight in ten (80 per cent) of respondents suggested the reason they bought ‘non-shop’ products was related to the high cost of tobacco products in the UK.

Stock piling large amounts of tobacco bought on holiday was not an issue for 68 per cent of smokers.

The survey also highlighted a significant rise in the trend of buying online, which increased by 70 per cent in just one year. When buying from a ‘non shop source’, smokers were found to buy large quantities, with a quarter (23 per cent) buying at least 200 cigarettes every time.

The cost of cigarettes in the UK is up to sixteen times more expensive than in other European countries. In Belgium smokers pay £4, in Spain £3.80 and in Moldova just 57 pence for a packet of 20 cigarettes.

More here: Smokers use holidays to dodge soaring UK cigarette prices (Forest Online).