Budget 2006 and smoking: Bad news for public health?

Wednesday 22 March 2006

ASH Media Release:  Wednesday 22nd March 2006


Budget 2006 and Smoking:

Bad News for Public Health?


The Chancellor raised the tax on cigarettes only in line with inflation – stating that this will mean a rise of 9p a packet for an average pack of 20 cigarettes.


This is equivalent to a tax rise of 2.6%. But it does not mean that the total price of a packet of cigarettes will rise by the rate of inflation. For this to happen, prices would have to rise as follows (figures based on prices quoted in HM Revenue and Customs Tobacco Factsheet: November 2005, http://www.uktradeinfo.com/index.cfm?task=facttobac):

  • Premium price cigarettes: 13p
  • Mid price cigarettes: 12p
  • Economy price cigarettes: 11p
  • Ultra low price cigarettes 10p


Since 1997, tax levels for most brands of UK cigarettes have fallen as a percentage of total price. HM Revenue and Customs figures show:


  • Premium price cigarettes: tax 54.4% of total price in 1997 and 52.4% in October 2005
  • Mid price cigarettes: tax 56.2% of total price in 1997 and 53.7% in 2005
  • Economy price cigarettes: tax 57.5% of total price in 1997 and 55.2% in 2005.

Tobacco taxation reduces tobacco consumption because as the price goes up people quit smoking, cut back on the amount they smoke, or in the case of young people never start [1].

In 2004, the total tax take from tobacco was £8.1 billion.


Commenting,ASH Director Deborah Arnott said:


<spanstyle=’font-size:11.0pt’>“Tobacco price rises are absolutely key to discouragingpeople from starting to smoke and helping them to quit. But this Budget will meana fall in the real cost of smoking over the next year, failing to reduce smokingrates and undermining the good work done by the House of Commons recently invoting for comprehensive smokefree legislation in workplaces and enclosedpublic places. This can only be bad news for public health.”




[1] Studies show that a 1% risein relative cigarette price results in a fall in the amount smoked in the range-0.25 to 0.5% (Chaloupka et al 2002), commonly referred to as price elasticity.The young and poor people have been found to be most price sensitive with theirconsumption falling up to 10% in response to a real price increase of 10%(World Bank 2001).