Taxation & Illicit Trade

Raising the price of tobacco through taxation encourages people to stop smoking or dissuades them from starting. Tobacco tax raises revenue for the Treasury thus reducing the need for taxes on jobs and investment. High tobacco tax, which is recommended by the World Bank  is recognised as a good health and economic policy.

Tobacco smuggling and sales of illicit tobacco at reduced prices on the black market undermine the use of taxes as a means of creating a price incentive not to smoke.  Therefore taxation of tobacco and initiatives that tackle tobacco smuggling are important tobacco control levers to reduce smoking and protect public health.

Some commentators have expressed concern that high tobacco prices are regressive, i.e. that low income smokers pay a higher proportion of their income in tobacco duty.  However, the evidence shows that low income smokers are most likely to respond to price increases by quitting. Overall, the public health benefits of high tobacco taxation are greater than the potential harms of the increased price among low-income smokers who do not quit.  Using money raised from tobacco duty to pay for stop smoking services targeted at low income smokers is one way of addressing concerns that tobacco tax is unfair for poor smokers.

Article 6 of the Framework Convention on Tobacco Control requires nations that have ratified the treaty to adopt tax and price policies to reduce tobacco consumption. Measures against smuggling and counterfeiting are addressed under Article 15 of the FCTC.   Guidelines on the implementation of Article 6 were adopted at the 6th Conference of the Parties in 2014.

Before the Budget each year, ASH produces a submission to the Chancellor of the Exchequer, supported by numerous other health charities, regarding changes to tobacco taxes in the Budget and other key issues on tobacco policy.