Smuggling worry over tobacco rise

Some retailers say smuggling may force their shops to close

The 7p rise in tax on a packet of cigarettes could play into the hands of smugglers, shopkeepers are warning.

The Retailers Against Smuggling group said tobacco shops were being pushed out of business by smuggling.

Raising the difference in prices between the UK and other European nations would not help, it argued.

Anti-smoking groups welcomed the tax rise but also worry about smuggling. But Mr Brown says progress is being made and promised new measures.

The chancellor said he had decided to go ahead with the annual inflation rise in duty on cigarettes "for public health reasons" from 1800 GMT on Wednesday.

Counterfeit dangers

Tobacco smuggling costs more than £2.5m a year in lost tax revenue.

But the government says that since 2000 share of the market taken by illicit cigarette sales has dropped by a quarter to 15% from its peak.

The Budget documents promise the Treasury will continue to target the rising amount of fake cigarettes being sold.

The chancellor should have reinforced the tobacco reduction goal by making a strong commitment today to do more to tackle smuggling Deborah Arnott Ash

Counterfeits make up a half of the smuggled cigarettes seized by Customs and can be contaminated by chemicals such as arsenic.

The documents add: "The government is considering further action to tackle the smuggling of hand-rolling tobacco with a view to announcing a package of further measures later in 2005."

A report from a committee of MPs this week warned that smuggling of hand-rolled tobacco was running "out of control", with duty paid on only three out of every 10 packets consumed in the UK.

Closure fears

Retailers Against Smuggling, an offshoot of the Tobacco Alliance and funded by the Tobacco Manufacturers' Association, said the duty rise was a "black day" for independent shopkeepers.

Spokeswoman Audrey Wales said: "When will the chancellor realise that tobacco smugglers are plaguing the streets of Britain because the high levels of taxation on tobacco in the UK create a huge difference in price between tobacco here and elsewhere?

"It is this price difference which gives smugglers all the reason they need to commit their crime."

Research for the group suggests 26% of retailers are considering closing their shops because of the effects of tobacco smuggling on sales.

Deborah Arnott, from health campaigning charity Ash, said the illegal market would continue until the government made tobacco firms put stricter controls for their products.

"Whilst we welcome the modest increase in tobacco tax, the chancellor should have reinforced the tobacco reduction goal by making a strong commitment today to do more to tackle smuggling," she said.

Smuggling was a global problem, added Ms Arnott, but the UK had the worst record in Europe.