February 21st, 2008:

Health Groups Call On Chancellor To Prioritise Anti-tobacco Smuggling Measures And Sign EU-Wide Agreements

ASH news release: Embargo: 00:01 Thursday 21st February 2008

On behalf of 22 health groups, ASH will be meeting the Exchequer Secretary, Angela Eagle today to present plans on tackling smuggling and raising tobacco taxes, ahead of the forthcoming Budget. [1]

ASH and more than 20 other health groups are calling on the Chancellor to:

– Re-introduce the real price escalator to raise the tax on tobacco by at least 10p per pack above the rate of inflation [2]
– Maintain the 5% VAT on nicotine replacement therapies that was introduced in last year’s Budget (the tax was reduced from 17.5% as an incentive to increase uptake)
– Implement a revised anti-smuggling strategy with challenging new targets
– Sign up to Agreements reached between other EU countries and two of the world’s leading tobacco companies – Philip Morris International and Japan Tobacco International – which put the responsibility for reducing smuggling on the tobacco companies themselves

As the UK is the only EU country not to have signed the new anti-smuggling agreements, ASH will be asking the Treasury to sign up without further delay. In December 2007, Japan Tobacco International signed an Agreement committing the company to stiff seizure payments if its products were found to be illegally traded within the EU. As JTI now owns the British company Gallaher, it commands around 40% of the UK tobacco market. Therefore there is a compelling reason for the UK to be a signatory to the EU Agreement. [3]

ASH will also be asking the Government to explain its policy on measuring counterfeit tobacco, since the latest published estimate suggests that only a quarter of the illegal cigarette market consists of counterfeit product, yet the focus of attention has been on the counterfeit trade. [4]

Deborah Arnott, Director of the health campaigning charity ASH, said:

“Now is the time for the Government to build on the popularity of the smokefree legislation and demonstrate its ongoing commitment to reducing smoking by increasing tobacco taxes. Raising the price of tobacco is the single most important measure but this must be done hand in hand with effective anti-smuggling measures.”

Notes and links:

[1] Budget 2008: Tobacco tax submission by ASH and 22 other health organisations. Available here.

[2] Research has shown that there is widespread public support for raising tobacco tax if it is used to fund anti-smoking policies. A survey by Professor Robert West found that 78% of the adult population would favour a 20p per pack tax rise if the money raised was used to fund tobacco control measures. See here.

[3] For further information about the JTI anti-smuggling agreement see here.

[4] Although there has been a rise in the number of seizures of counterfeit products in recent years, the latest Government estimate suggests that only around a quarter of the smuggled cigarette market is counterfeit. Thus legitimately manufactured cigarettes that are sold onto the black market still represent the bulk of the illicit market share. HMRC Press release, 26 Sept 2006