Government’s consultation on a levy on tobacco industry welcomed by ASH



Wednesday 03 December 2014

ASH warmly welcomed the announcement in today’s Autumn Statement that the Government will soon be launching a consultation on introducing a levy on the tobacco industry. In his Statement published today, the Chancellor stated:

“Smoking imposes costs on society, and the government believes it is therefore fair to ask
the tobacco industry to make a greater contribution. The government will shortly launch a
consultation on introducing a levy on tobacco manufacturers and importers.” [1]

The tobacco industry makes obscene profits from its deadly products – far higher than any other consumer industry. Two companies account for over 80% of sales of tobacco in the UK – Imperial Tobacco and JTI. Imperial’s UK profits in 2010 were £614m, a profit margin of more than 67%. JTI’s profits in the UK for the same year were £345m, with a profit margin of over 38%. [2]

Deborah Arnott, Chief Executive of health charity ASH said:

““For months ASH has been calling on all the main political parties to include a pledge for a levy on the tobacco industry in their party manifestoes. It’s almost like Christmas come early to have the Government launch a consultation on how to make the tobacco industry pay for the damage it does. All that’s needed now is for the Government to announce that it is going ahead with standardised packaging for cigarettes too.”

ASH estimates that a levy of just 1 pence per stick could raise £350 million. [3] To have the greatest impact in reducing the cost to society caused by smoking, the levy should be used to prevent children from starting and to help existing smokers to quit.

ENDS

Notes:

[1] Extract from the Chancellors’ Autumn Statement:
1.252 “Smoking imposes costs on society, and the government believes it is therefore fair to ask
the tobacco industry to make a greater contribution. The government will shortly launch a
consultation on introducing a levy on tobacco manufacturers and importers.”

[2] Branston JR and Gilmore A (2014) The case of Ofsmoke: the potential for price cap regulation of tobacco to rasie £500m per year in the UK. Tob control 23(1):45-50

The Autumn Statement is available here.

[3] HMRC give statistics on the numbers of cigarettes released for consumption on which tax has been paid. For the last financial year for which there is information – 2013/14 this was 35,414 million cigarette sticks (HMRC Tobacco Bulletin July 2014) This is just for manufactured cigarettes. One in four cigarettes are hand-rolled. Therefore a levy on hand-rolled tobacco would raise more than this.

[4] The Autumn Statement also reported that the government is considering the responses to the Minimum Excise Tax (MET) consultation and a decision whether to pursue a MET further will be made in due course. In addition, the government will be introducing measures to tighten tobacco anti-forestalling restrictions and apply penalties for non-compliance, in order to prevent tax avoidance.