Tobacco tax hike prompts smuggling warning

A packet of 20 cigarettes will cost 21p more on Tuesday.

The Freedom Organisation for the Right To Enjoy Smoking Tobacco (Forest) claimed the 21p price increase, announced by Chancellor Gordon Brown in the spring budget, would be counter productive.

Forest campaigns director Martin Bell said: "Despite 80% of the price of a pack of 20 cigarettes going to the government, Gordon Brown is greedy for more.

"First, smokers will have to pay through higher product prices, and second, non-smokers will have to be taxed more because of the losses in government revenue caused by smuggling."

Forest claimed that the government had to revise upwards its estimate of the extent of losses through smuggling to £790m in 1997 - £100m more than previously thought.

For 1998 the government is estimating that as much as £1bn will be lost from tax revenues.

Action on Smoking and Tobacco (ASH) dismissed the claims.

Dire warnings

Director Clive Bates said the tobacco industry stood to gain from making dire warnings about smuggling - but actually benefited from a black market trade.

"Smuggling keeps cheap cigarettes on the market so that people who would otherwise have given up don't, and remain smokers.

"Smuggling also allows the tobacco industry to make the argument for lower taxes in legal markets. That keeps the price down and consumption up so they can sell more cigarettes."

Mr Bates said the solution to the problem was not to reduce taxes, but to step moves to catch and penalise smugglers.

"Raising taxes on tobacco is extremely important. A 10% increase in price leads to a 4-5% reduction in consumption," he said.

"It is one of the most tried and trusted methods for successfully reducing smoking. People say enough is enough and give up or never start."