Tuppence- a-cig tax rise would be good for health and wealth, say health campaigners



Saturday 03 March 2012

A submission to the Treasury in advance of the Budget by ASH and the UK Centre for Tobacco Control Studies (UKCTCS), endorsed by 91 health organisations, urges the Chancellor to raise the tobacco tax escalator from 2% to 5% above inflation (equivalent to about 2p per cigarette) in order to reduce smoking while at the same time raise much needed revenue. [1] Despite increases in tax in recent years, the real cost of smoking has fallen compared to the cost to smokers in the 1960s.

Professor John Britton, Director of the UK Centre for Tobacco Control Studies at the University of Nottingham, commented:

“Price is the most effective way to encourage smokers who are thinking of quitting to make that step. UK cigarettes are more affordable now than they were when the health risks of smoking first became known over half a century ago. It is crucially important to use the price levers to nudge smokers to change.”

The Budget submission acknowledges measures put in place by the government to reduce the illicit trade of tobacco – a policy that has been highly successful for over a decade while tobacco taxes have continued to rise. [2] This is in stark contrast to claims made by the tobacco industry that raising taxes leads to a rise in smuggling.

Nick Forbes, Leader of Newcastle City Council commented:

“As local authorities take on responsibilities for public health it is important to support measures that will bring proven health benefits to our local population. We know that raising the price of tobacco reduces smoking rates and in the north-east we are working hard with partners to further reduce smoking by removing cheap illicit tobacco from our streets. These two policies must go hand-in-hand if we are to make real in-roads into the health problems caused by smoking.”
In anticipation of the Government’s consultation on tobacco packaging, the tobacco industry is already arguing that plain, standardized packaging would lead to an increase in illicit trade when there is no evidence to support this argument. In fact, tobacco packs are already easily counterfeited which is why the tobacco industry puts hidden markings on all packs that are used to identify them. [3] Plain packs will still require health warnings and other legally required markings so it will make no difference to trends in counterfeiting.

Deborah Arnott, Chief Executive of ASH said:

“Every year the tobacco industry attempts to undermine proven measures to curb smoking in order to protect its own wealth. Not content with fallacious arguments about tax and smuggling, the industry is now trying to stop the inevitable march towards plain standardised tobacco packaging on the grounds that it will increase smuggling. As ever the industry is clutching at straws with its ill-founded arguments that will be found wanting.” [4]
ENDS
Notes:
[1] A 5% above inflation tax rise is equivalent to about 2p per cigarette, based on an average priced cigarette brand.

ASH is a health campaigning charity working to reduce the harm caused by tobacco. The UK Centre for Tobacco Control Studies is a network of nine universities in the UK working in the field of tobacco control involved in research, policy development, advocacy, teaching and training.

The Budget submission to HM Treasury by ASH & UKCTCS has been endorsed by 91 UK health and welfare organisations. Available at: http://www.ash.org.uk/files/documents/ASH_832.pdf

Key recommendations include:

  •  Raising the tobacco tax escalator from 2% to 5% above inflation from 2012 onwards.
  •  Further reduce the differential between tax levels on hand-rolled tobacco (HRT) and cigarettes to discourage smokers from switching to hand-rolled cigarettes
  •  Set targets to reduce the illicit market share of cigarettes to 3% by 2015-16 and of HRT to 25% (from the current levels of 10% and 46% respectively)
  •  Implement legislation throughout the UK similar to that in Scotland to require registration of tobacco retailers. This would protect the rights of legitimate sellers and penalise sellers of illicit tobacco
  •  Investigate the feasibility of introducing a price cap on tobacco product profits.

[2] In 2001-02 the estimated illicit market share of cigarettes was 20% (mid-point of range). By 2009-10 this had declined to 10%. (Source: Tackling Tobacco Smuggling Together. HMRC/UK Border Agency, 2008; Measuring Tax Gaps. HMRC 2011.) Tax on cigarettes rose in line with inflation from 2001-2008 and above inflation in 2009-2011. Smoking prevalence fell from 27% in 2001 to 21% in 2008-09. (General Lifestyle Survey, ONS, 2009)

[3] See the TMA’s website for details:
http://www.the-tma.org.uk/policy-legislation/tobacco-smuggling-crossborder-shopping/counterfeit/

[4] For further details about tobacco plain packaging, see:
http://www.smokefreeaction.org.uk/plain-packaging.html

and how packs are used as advertising tools:
http://www.smokefreeaction.org.uk/files/docs/Packsheet.pdf