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September 28th, 2017:

Nearly Three Quarters of UK Smokers Avoid Paying Tobacco Duties

Major new survey reveals true impact of high Government taxes and new regulations

Government warned of risks of a second duty increase in under one year

The trade association for the UK tobacco industry is today publishing the results of the largest annual survey of 12,000 UK smokers that reveals the impact of the Government’s high tobacco taxes and shows the problem being made worse by new draconian regulations introduced this year including plain packaging.

Key findings:

– 72.5% or around 7 million smokers buy tobacco from sources where UK taxes won’t be paid including illicit tobacco and from abroad.

– 41% of smokers bought tobacco from illicit tobacco sources.

– Smokers on higher incomes (over £60,000) were as likely to buy illicit as those on low incomes (under £6,000).

– 48% of smokers who earned less than £6,000 bought tobacco from illicit sources.

– 40% of smokers who earned more than £60,000 bought tobacco from illicit sources.

– Smokers are stockpiling cheap or illicit tobacco with 53% of cigarette smokers buying 200 or more when they buy from sources that won’t have paid UK tax.

– 88% of smokers thought that tobacco prices are too high – just 2% thought that prices were too low.

– 57% of smokers said that rising prices tempt them to purchase tobacco that won’t have paid UK tax.

– Taxes on tobacco have increased by 65% since 2010 and by 5.9% at the 2017 spring Budget.

– 45% of smokers said that the ban on small tobacco packs and the introduction of mandatory plain packaging tempted them to purchase illegal tobacco. 31% said it did not tempt them.

– Analysis by Oxford Economics says that banning small tobacco packs will cost HM Treasury £2.1 billion in its first year.

– HM Treasury lost out on £3 billion from tobacco purchases which didn’t pay UK taxes in 2015-16.

– Only 12% of smokers who knew of illicit tobacco in their local area reported it to the authorities.

– This is a 40% fall compared to the 20% who reported it in 2016.

Tobacco on which UK taxes is not paid is a major issue for law enforcement and taxpayers. £3 billion of tax were lost to the illicit trade and cross border shopping in 2015-16, an amount that cannot be spent on important public services. The link between high tobacco taxes and the illicit market is acknowledged by many leading independent institutions including the Royal United Services Institute.

This survey of over 12,000 smokers supports these conclusions with the vast majority saying that tobacco prices are too high; government taxes account for up to 90% of the price of a pack of cigarettes.

The regulatory changes to the UK tobacco market this year – the ban on small packs and the introduction of plain packaging – might make the problem worse, with 45% of smokers saying they are more likely to purchase illicit tobacco because of the changes. Moreover, smokers are increasingly buying larger amounts of untaxed tobacco with 53% saying they buy 200 cigarettes or more from non-taxed sources.

In addition, government policies appear to have alienated smokers so they are not concerned when they know illegal tobacco is being sold in their local area. Just 12% of smokers who had seen illicit tobacco reported it (a 40% decrease on last year (20%) and 64% of those who did not say this is because it is ‘none of their business’ (a 7 percentage point increase on 2016). There is also growing evidence found by a recent Trading Standards report to suggest the children are increasingly accessing illicit tobacco given its widespread availability and affordability.

Overall this survey confirms that the Government’s policies do not have the support of smokers and are likely to be a large contributing factor to the high level of illegal tobacco in the UK.

Responding to this year’s findings, TMA Director General, Giles Roca, said:

“These results reveal the true extent of how the Government’s high tax policy, in creating some of the highest tobacco prices in Europe, has continued to push smokers to buy from non UK duty paid and illegal sources. High taxes have cost the Treasury billions of pounds in lost revenues whilst giving a boost to the criminals who are behind the illegal trade. There is also worrying evidence that children are increasingly accessing tobacco from these illicit sources.”

“The regulations that came fully into force this year banning small tobacco packs and introducing plain packaging are making the problem worse by pushing smokers towards the illicit market rather than encouraging them to quit.”

“There is a real risk that the problem could be made worse if the Government decides to increase tobacco duty for a second time in nine months in the upcoming Budget. These findings suggest the Government needs to completely re-think its tobacco taxation policy.”

ENDS

Notes to editors

1. The findings are drawn from a survey of 12,605 smokers from across the UK conducted in June 2017.

2. This is the fourth year that the TMA has polled smokers to find out their attitudes towards illicit tobacco.

3. £3 billion of tax from tobacco products was lost to the illicit trade (£2.4 billion) and cross border shopping £600 million) in 2015-16. HMRC, 2016, Measuring tax gaps, tobacco tax gap estimates 2015-16.

4. Oxford Economics estimated that the impact of the ban of packs of fewer than 20 cigarettes and hand rolling tobacco smaller than 30grams would be a reduction in tax revenue of £2.1 billion in its first year.

5. The Treasury raised tobacco duty at the budget in March 2017 by 2% above inflation. The autumn budget will take place on 22nd November 2017.

6. A survey undertaken by North West Trading Standards in 2015 found that 39% of children had purchased cigarettes with non-English health warnings.

7. The Tobacco Manufacturers’ Association (TMA) is the trade association for the UK’s tobacco industry. Our members are British American Tobacco UK Ltd, Gallaher Ltd (a member of the JTI Group of companies) and Imperial Tobacco Ltd.

8. Findings from previous year’s surveys can be found at http://www.the-tma.org.uk.

SOURCE The Tobacco Manufacturers’ Association (TMA

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WHO Statement on Philip Morris funded Foundation for a Smoke-Free World

WHO statement http://www.who.int/mediacentre/news/statements/2017/philip-morris-foundation/en/

28 September 2017

On 13 September 2017, tobacco company Philip Morris International (PMI) announced its support for the establishment of a new entity – the Foundation for a Smoke-Free World. PMI indicated that it expects to support the Foundation by contributing approximately USD 80 million annually over the next 12 years.

The UN General Assembly has recognized a “fundamental conflict of interest between the tobacco industry and public health.” (1) WHO Member States have stated that “WHO does not engage with the tobacco industry or non-State actors that work to further the interests of the tobacco industry”, (2) the Organization will therefore not engage with this new Foundation.

Article 5.3 of the WHO Framework Convention on Tobacco Control (WHO FCTC) obliges Parties to act to protect public health policies from commercial and other vested interests of the tobacco industry in accordance with national law. Guidelines for implementation of Article 5.3 state clearly that governments should limit interactions with the tobacco industry and avoid partnership. These Guidelines are also explicit that Governments should not accept financial or other contributions from the tobacco industry or those working to further its interests, such as this Foundation.

Strengthening implementation of the WHO FCTC for all tobacco products remains the most effective approach to tobacco control. Policies such as tobacco taxes, graphic warning labels, comprehensive bans on advertising, promotion and sponsorship, and offering help to quit tobacco use have been proven to reduce demand for tobacco products. These policies focus not just on helping existing users to quit, but on preventing initiation.

If PMI were truly committed to a smoke-free world, the company would support these policies. Instead, PMI opposes them. PMI engages in large scale lobbying and prolonged and expensive litigation against evidence-based tobacco control policies such as those found in the WHO FCTC and WHO’s MPOWER tobacco control, which assists in implementation of the WHO FCTC. For example, just last year PMI lost a six year investment treaty arbitration with Uruguay, in which the company spent approximately US$ 24 million to oppose large graphic health warnings and a ban on misleading packaging in a country with fewer than four million inhabitants.

There are many unanswered questions about tobacco harm reduction (3), but the research needed to answer these questions should not be funded by tobacco companies.

The tobacco industry and its front groups have misled the public about the risks associated with other tobacco products. This includes promoting so-called light and mild tobacco products as an alternative to quitting, while being fully aware that those products were not less harmful to health. Such misleading conduct continues today with companies, including PMI, marketing tobacco products in ways that misleadingly suggest that some tobacco products are less harmful than others.

This decades-long history means that research and advocacy funded by tobacco companies and their front groups cannot be accepted at face value. When it comes to the Foundation for a Smoke-Free World, there are a number of clear conflicts of interest involved with a tobacco company funding a purported health foundation, particularly if it promotes sale of tobacco and other products found in that company’s brand portfolio. WHO will not partner with the Foundation. Governments should not partner with the Foundation and the public health community should follow this lead.

WHO tells governments to reject Philip Morris-funded smoking foundation

The World Health Organization told governments on Thursday not to get involved in a foundation funded by tobacco firm Philip Morris International to look at ways of reducing the harm from smoking.

http://www.reuters.com/article/us-health-tobacco/who-tells-governments-to-reject-philip-morris-funded-smoking-foundation-idUSKCN1C31X4

The U.N. health body said there was a conflict of interest in a tobacco firm funding such research – drawing a sharp rebuke from the Foundation’s head who said his work was independent.

Philip Morris International said this month it wanted to help set up a body called the Foundation for a Smoke-Free World and planned to give it about $80 million a year for 12 years to keep it running.

The company did not immediately respond to a request for a comment on the WHO’s statement.

The U.N. body said on Thursday there were already proven techniques to tackle smoking – including tobacco taxes, graphic warning labels and advertising bans – which the tobacco industry had opposed in the past.

“WHO will not partner with the Foundation. Governments should not partner with the Foundation and the public health community should follow this lead,” it said.

The foundation’s founder and president-designate, Derek Yach, a former senior official at the WHO, said more collaboration, not less, was needed to win the war on smoking.

“I am deeply disappointed, therefore, by WHO’s complete mischaracterisation of the nature, structure and intent of the Foundation in its recent statements – and especially by its admonition to others not to work together.”

He said the foundation was a non-profit organization with strict rules to insulate it from the influence of the tobacco industry, and its research agenda would be subject to peer review.

Reporting by Tom Miles; Editing by Toby Chopra and Andrew Heavens

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