Are cigarettes being over-taxed?

11 August 2015

cigarettesEveryone now knows that smoking is A Very Bad Thing, and the Government have been taking this as carte blanche to slap as much tax as humanly possible on those evil little sticks of icky stuff. In fact, over the past five years, taxes on tobacco products have risen by 40%, meaning that tax is now around three-quarters of the price of a packet of cigarettes- the highest in the 28 states of the EU. But have the Government pushed smokers too far? A major new survey of over 12,000 adult smokers suggests that consumers are now turning to‘non-shop sources’ to avoid paying the excessive taxation-resulting in a massive loss to Treasury coffers.

The poll, by Mitchla Marketing/Survey Sampling International, is one of the largest of its kind and received input from law enforcement officials and surveyed smokers nationwide.It found almost one third (29 per cent) of smokers are now buying tobacco products from ‘non-shop sources’ due to the excessive costs in the UK.

While cigarettes (and to a lesser extent, alcohol) have always been seen as a no-brainer for levying taxes- after all the demand is considered ‘inelastic’, meaning no matter how much the price rises, the demand will stay the same- it seems there does become a tipping point at which demand doesn’t fall, but desire to do the right thing in respect of UK duty, does. This large increase in ‘non-shop’ alternative shopping has caused the Treasury to lose an estimated £2.6 billion of tax revenue every year.

The survey found that the primary reason smokers were buying non-UK duty paid products was due to the high prices in the UK – UK smokers buying a premium brand of 20 cigarettes duty-paid are charged over £9, while 87% of those buying from ‘non-shop’ sources pay under £5.

The survey also found that over half of smokers (51%) plan to buy tobacco products from abroad and bring back as many as they legally can (although almost half of those don’t actually know how many they can bring back, which depends whether you are travelling from inside or outside the EU, of course). Almost one in five smokers (17%) now regularly buy their tobacco from abroad to avoid paying UK duty and 78% of smokers said they had no objections to buying fags without UK tax, so long as it was legal, i.e. from abroad rather than from the back of a van.

Of course, cigarettes for ‘personal use’ can be brought back in potentially unlimited quantities from EU countries, but even within the EU, UK fags can cost up to sixteen times more- in Belgium smokers pay £4, in Spain £3.80 and in Moldova just 57 pence for a packet of 20 cigarettes- so it’s no wonder savvy smokers are buying cheap without paying UK tax.

Giles Roca, Director General of the Tobacco Manufacturers’ Association (TMA) said: “This survey shows that excessive taxation on tobacco products is forcing up prices and driving consumers away from legitimate sources. This is clear proof that the government’s high tax tobacco policy is not working.”

Naturally, non-smokers are probably far happier with the amount of tax levied on cigarettes, given the amount of revenue it brings in that can be used to fund the NHS for example, treating all those nasty smokers’ coughs. But what happens if the balance tips and the maximum revenue is earned at a slightly lower tax rate, meaning smokers can’t be bothered to try and get their fix cheaper?

TOPICS:   World News   Health

18 comments

  • jim
    nicotine - more addictive than heroin - but the withdrawl affects dont kill u. so the govt has millions of addicts - and they keep pushing the price up. cunts. that is all
  • Albi
    Petrol is overtaxed. Cigarettes aren't. Next...
  • Gas M.
    Albi - indeed, paying VAT on the tax is a real piss-take
  • Raggedy
    Average income from tax on cigarettes yearly: £12 billion Average cost to the NHS to treat smoking related diseases yearly: £6.5 billion You'd think with the extra £5.5 billion they're raking in, they could actually fix the roads or invest in a European style public transport system. Perhaps they're investing it in the next NHS IT system? Which won't work ...
  • jim
    yeah cos your addicted to petrol... your body produces receptors in your brain that demand petrol. my point is hiking the price up on a product only addicts are buying is not a nice thing.
  • Father J.
    > my point is hiking the price up on a product only addicts are buying is not a nice thing. Who cares? Only nobheads smoke anyway.
  • Raggedy
    @Father Jack At the risk of being controversial, that's a "my football team is better than yours (cos I say so)" type comment. Not based on fact . Just take a stroll down your local main road and you will be able to see, without a shadow of a doubt, that MOST people who drive are complete and utter knobheads. :-)
  • Father J.
    "Just take a stroll down your local main road and you will be able to see, without a shadow of a doubt, that MOST people who drive are complete and utter knobheads. :-) " Maybe, but EVERYONE who smokes tabs is a nobhead.
  • jim
    @father jack opinions are like assholes - everyone has one.
  • Father J.
    Smoke, do you Jim??
  • jim
    troll do you jack?
  • Father J.
    I neither smoke, nor do I troll.
  • Raggedy
    Looks like Jack is a born-again non-smoker. Logical reasoning goes completely out the window. Death to the evil weed and all who smoke her. I bet he coughs whenever he walks past a smoker LOL
  • jim
    yeah ex smokers piss me off. getting all high and mighty but all the while we all breathe in the most polluted air in europe.
  • Father J.
    I am not a reformed smoker, because that would make me a nobhead. I have never smoked. "while we all breathe in the most polluted air in europe." Polluted by twats like you smoking tabs and flying on Ryanair, no doubt.
  • jim
    you need to smoke a cig an chill out maybe read a book as well - learn ya self sum knowledge innit. you might find that cars and industry dont pump out pure oxygen. also maybe stop calling people names - you know like grow up? dam those ex smokers
  • Raggedy
    @Jack Tarring all of one set of people with the same brush makes you a bigot and unable to reason effectively. Insulting people who criticize or have a different opinion from yours tends to devalue your argument. There's a lot more things to get annoyed about than smoking. Your ill-informed comments for one. :D
  • Father J.
    I am perfectly well educated, thank you. Considerably better than you, in fact, judging by your inability to use even the most occasional capital letter. Anyway... enjoy your tabs, nobhead.

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