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October 20th, 2012:

Tobacco smuggling falls despite industry protests over tax rises

Rates of tobacco smuggling into the UK have fallen despite earlier claims from the tobacco industry that tax rises would prompt an increase in the illicit trade, official figures show.

An estimated nine per cent of cigarettes consumed in the UK in 2010/11 were illicit, compared with 11 per cent in the previous year, according to HM Revenue & Customs.

There was also a reduction in smuggled hand-rolled tobacco, from 42 per cent to 38 per cent.

Tax revenues have simultaneously grown while the use of illicit products has declined.

Robin Hewings, Cancer Research UK’s tobacco policy manager, commented: “The tobacco industry claims that cigarette smuggling is ‘booming‘, ‘set to grow‘ and that the UK is becoming the European ‘hotspot‘.

“Today’s figures show the opposite. This is yet another instance of the tobacco industry making claims that turn out not to be true.”

Rates of tobacco smuggling have been falling for a decade now, he added.

He explained that the decline has been achieved thanks to improved enforcement and joint working between governments to prevent the tobacco industry from facilitating the illicit trade.

He said: “The tobacco industry claims that plain packs will increase tobacco smuggling.

“Independent experts are clear their claims do not make sense. Today’s figures show why it is generally best not to trust what they say.”

Tobacco duty was increased by inflation plus one per cent at the March 2010 Budget, followed by a rise of inflation plus two per cent at the March 2011 Budget.

After those two Budgets, lobbyists for the tobacco industry repeated their claims that increased taxation and tougher regulations on tobacco use would consequently increase illicit trade.

The Tobacco Manufacturers Association (TMA) suggested after the 2010 Budget that “the largest tax increase on tobacco products in 10 years” would stimulate increased illicit activity.

After the 2011 Budget the TMA referred to the tax increase as “a complete lack of joined-up thinking as taxation is the acknowledged driver of the illicit tobacco trade”.

Commenting on the latest figures, ASH chief executive Deborah Arnott said the ongoing decline of the illicit tobacco trade is “good news for the British economy”.

She added: “Once again it is clear that there is no reason to believe tobacco industry propaganda about the relationship between illicit trade, tobacco taxes, plain packaging or other tobacco control measures.”

Copyright Press Association 2012

EU’s Dalli insists on innocence in tobacco scandal

John Dalli: “I did not have any idea or awareness about any communication about this issue”

Former EU health commissioner John Dalli has insisted on his innocence in an alleged attempt to peddle influence, days after he resigned.

He was asked about a fresh allegation that a businessman with links to him had sought 60m euros (£49m; $79m) from a Swedish company.

“These are really fantastic figures,” he told New Europe TV in an interview.

He said at the time he had absolutely no idea of any approach to the tobacco firm made on his behalf.

Mr Dalli, a former Maltese cabinet minister, has argued that he is the victim of a tobacco lobbying campaign to block tough new legislation – the Tobacco Directive – to make smoking less attractive.

‘Down payment’

Tobacco producer Swedish Match said it had been asked to pay 60m euros, and in return the commissioner would water down the new legislation.

“I can say that those are the amounts we are talking about, and I’d also like to stress that for us the amount of money does not matter,” PatrikHildingsson, a spokesman for the Swedish company, told AFP news agency.

He said the alleged bribe would have been paid in two instalments, with 10m euros due before the new legislation was enacted, and the remaining 50m euros to be paid when the new rules were in place.

On Tuesday, the European Commission announced Mr Dalli’s resignation, saying that the EU’s anti-fraud office (Olaf) had established that a Maltese businessman had tried to use his contacts with Mr Dalli for financial gain.

Olaf said it had not found “conclusive evidence of the direct participation of Mr Dalli but did consider that he was aware of these events”.

‘Snus offer’

Swedish Match complained to the commission in May that a Maltese entrepreneur had used his contacts with Mr Dalli to try to gain financial advantages from the company.


  • A moist tobacco which is placed under the lip
  • Produced in various flavours, including liquorice, lemon, coffee, aniseed, elderflower, cranberry and mint
  • Banned in all EU states except Sweden

The entrepreneur had allegedly offered to influence legislation regarding an EU export ban on snus, a smokeless tobacco taken orally.

No transaction was concluded between the company and the entrepreneur and no payment was made, the commission said.

Olaf’s final report and its recommendations were being sent to the attorney-general of Malta, the commission added.

Mr Dalli, 64, became the EU’s commissioner for health and consumer policy in 2010.

His official biography shows that his career in Maltese politics stretches back more than a quarter of a century.

First elected an MP in 1987 for the centre-right Nationalist Party, he was a cabinet minister in several governments, serving as finance minister three times.

Commission Vice-President Maros Sefcovic is taking over Mr Dalli’s duties on an interim basis until a new commissioner of Maltese nationality is appointed.