Budget: ASH welcomes government consultation on important tobacco measures



Wednesday 19 March 2014

ASH and the other 80 organisations endorsing its budget submission had urged the government to introduce a minimum excise tax for tobacco and support the Chancellor’s decision to consult during summer 2014 on whether a minimum excise tax for tobacco could help improve public health. [1]

Deborah Arnott, chief executive of ASH said:

“We’re delighted the Chancellor has listened to the public health community’s concerns that the tobacco industry is manipulating its prices to undermine the public health benefits of tobacco taxation and is going to consult on how to prevent this happening in future.”

Following a National Audit Office report and an inquiry by the Public Accounts Committee which both criticised the industry for over supply of hand-rolling tobacco the government also announced a consultation on a range of measures to strengthen its response to tobacco smuggling with a view to legislating in 2015. [2]

Deborah Arnott said:

“The Government has now taken seriously the fact that the tobacco industry is still not controlling its supply chain. Tougher legislation to tackle this more effectively is the right way forward.”

ENDS
Notes:

[1] A submission (pdf) to the Treasury in advance of the Budget by ASH and the UK Centre for Tobacco Control Studies (UKCTCS), endorsed by 80 health organisations, had urged the Chancellor to increase the tobacco tax escalator to 5% above inflation in order to reduce smoking while at the same time raise much needed revenue. The submission is available at:

The submission called for a Minimum Excise Tax (MET)
“The revised EU directive allows for a minimum excise tax for all products. We urge the government to introduce the highest possible minimum excise tax in order to help reduce the tax differential between different price categories. This should help prevent the tobacco industry from absorbing taxes on the cheapest products and thus undermining the intended public health benefits of tobacco taxation.

To maximize taxation on lower than average priced cigarettes and set an effective floor below which the total tax burden can’t fall, the MET should be set equivalent to the maximum total tax burden allowable based on the Weighted Average Price (WAP). “

Council Directive 2010/12/EU of 16 February 2010 amending Directives 92/79/EEC, 92/80/EEC and 95/59/EC on the structure and rates of excise duty applied on manufactured tobacco and Directive 2008/118/EC”

[2] See: National Audit Office report and the Public Accounts Committee report.
The PAC noted:

“The Department has also failed to challenge properly those UK tobacco manufacturers who turn a blind eye to the avoidance of UK tax by supplying more of their products to European countries than the legitimate market in those countries could possibly require. The tobacco then finds its way back into the UK market without tax being paid. The supply of some brands of hand-rolling tobacco to some countries in 2011 exceeded legitimate demand by 240%. HMRC must be more assertive with these manufacturers. So far it has not fined a single one of them.”