Cigarettes up, spirits frozen

Smokers will have to dig deep in their pockets for an extra 20p from next year

The Budget has hit smokers in the pocket with a rise of 20p on a packet of 20 cigarettes. Drinkers will have to find a little extra money too, with 1p added to the price of a pint of beer.

Signals clear for smokers

The increase on cigarettes is in line with proposals the Chancellor set out last summer to raise tobacco duties by an average of 5% a year in real terms. It will come into effect in January 1999.

But smokers, consumer groups and retailers said they were disappointed because they believe that high taxes encourage smuggling from the continent where taxes are lower.

David Cassidy of the Fair Cigarette Tax Campaign said: "We were hoping he would bring tax in line with European prices ... People will now be encouraged to buy even more cigarettes from smugglers which will have an adverse affect on retailers."

But the price rise was welcomed by the British Medical Association and the Cancer Research Campaign who both agreed that making cigarettes more expensive encouraged people to stop smoking.

However the BMA's chairman, Dr Sandy Macara, also said he was worried about the pressure on low-income smokers who find it difficult to quit. "The public health minister must provide the carrot, and very soon, in the form of better support people who want to stop, " he said.

Scotch missed

Whiskey drinkers will be pleased with the freeze on spirit duty

Mr Brown said that duty will be frozen on spirits but from 1 January 1999 there will be:

• 1p on a pint of beer
• 4p added to the price of a bottle of wine
• 1p on a 33 bottle of alcopops and a litre bottle of cider
• 5p on bottles of fortified wine
• Duty on low strength sparkling wine will drop by 36p litre, while on sparkling cider (and perry) it will rise by 9p a litre, to bring the two similar products closer in price.

He also said that the Government plans to clamp down on smuggling of both alcohol and cigarettes.

But the drinks industry is annoyed that Gordon Brown has not listened to its calls for a cut in duty to stop the influx of cheap imports from the Continent.

Peter Lewis, director of the Wine and Spirits Association, said: "Increasing the tax will only encourage smuggling ... We doubt the Chancellor will see a penny more revenue from this tax increase as our shoppers desert our shops for Calais."

A spokesman from CAMRA, the Campaign for Real Ale said the added duty on a pint of beer was a blow for hard-pressed publicans with 60% of their trade made up of beer sales.

"Millions of pints of cheap French beer will continue to flood our shores. French brewers and Calais beer warehouses will be celebrating in style tonight while British publicans and beer lovers pick up the tab," he said.

But again health campaigners welcomed the news. Alcohol Concern said it believed higher prices deterred people from excessive drinking.