Pre-Budget Comment

Budget 2001: Governmentshould continue tobacco tax rise and reject tobacco industry clamour for dutycuts, and channel some tax back to low-income smokers

In advance of the 2001 Budget, ASH is calling on theGovernment to continue with sound tobacco tax policy and continue to increasethe price of cigarettes, and reject tobacco industry demands for a cut in taxlevels to tackle tobacco smuggling. The industry approach will increaseconsumption (and ill-health), reduce revenue and will have little impact onsmuggling. ASH calls on the Government to:

·        Continueprice increases by adding at least a further 20 pence per pack to cigarettesand restart tax increases on hand-rolling tobacco.  The aim must be to ensure price keeps up with growth in incomesso that tobacco does not become more 'affordable'.

·        Expandthe action already taken against smuggling to an investigation of why tobaccocompanies export billions of cigarettes to countries where there is no marketfor them - and where the most obvious customers are large-scale organised crimesyndicates that now dominate (80%) UK tobacco smuggling.

·        Requiretobacco companies to stop supply to wholesalers or overseas importers ifcigarettes shipped to that wholesaler reappear as contraband seized by theauthorities.  This will force somediscipline and security into the distribution chain.

·        Introducea system of detailed markings for all tobacco products to enable tracking fromfactory gate to, as far as possible, the final destination market. 

·        Considera liability regime in which tobacco companies are held responsible for ultimatelegal sale of the product and therefore have an incentive to secure thedistribution chain.  At present tobaccocompanies have multiple powerful incentives to have high levels of smuggling.

·        Takeat least one penny in every pound of tobacco tax and spend it on smokers byimproving services for smokers who want to quit and avoid the tax.  This would generate at least £70 ­ £90million a year which would adequately fund a good service for the smoker.

·        Becauseof the regressive impact of tobacco tax, ensure that low-income smokers are theprime target in government public health initiatives.

Hightaxation on tobacco remains one of the most effective instruments available toGovernment to reduce the consumption of tobacco and is supported by the WorldBank and World Health Organization.   Itis also a rational alternative to raising taxes on employment and investment.

Attached is a copy of the ASH's memorandum sent to HMTreasury.

ASH press releases with quotes on tobacco tax andsmuggling are at www.ash.org.uk/?press

Contact:  CliveBates:  020 7739 5902 (wk) or 077 68781237 (mobile) ISDN available