Speculation ahead of tomorrow’s Budget statement suggests there will few, if any, major surprises, which would be par for the course for a government that seems unable or unwilling to make any important decisions this side of the next general election.
Good Morning Britain presenter Richard Madeley was spot on yesterday when he and Susanna Reid interviewed the prime minister and Madeley suggested that many of Andy Burnham’s recent pronouncements were no more “kite-flying” to gauge the response.
As far as tobacco duty is concerned, it’s a minor issue partly because it’s not expected to go up. In any other year this would be a surprise, but this time there’s a very good reason for it, as ASH helpfully explained in their daily news bulletin yesterday:
Tobacco duties increased twice on 1 October: first under the annual tobacco tax escalator of RPI plus 2 percentage points, and then through an additional one off increase of £2.20 per 100 cigarettes or 50g tobacco, intended to maintain the price differential between nicotine vapes and tobacco products following the introduction of the Vaping Products Duty. Another increase is not expected in the budget.
Announced last year but not implemented until four weeks ago, that two-fold increase hiked the price of a packet of premium brand cigarettes like Marlboro above £20 for the first time. Increasing the duty again so soon would be harsh on consumers, and it would almost certainly drive even more smokers to the black market where packs of cigarettes are said to be available for £5 or less.
Anyway, despite accepting that yet another increase is unlikely so soon, ASH has been busy lobbying the government to target the tobacco companies, and therefore the consumer, in other ways. For example, in future budgets they want the chancellor to increase the tobacco tax escalator from 2% to 5% above RPI, raise minimum excise tax beyond the tax escalator, and ‘enhance’ the hand-rolled tobacco (HRT) tax escalator by an additional 10% above the tobacco tax escalator until ‘the tax per average HRT cigarette is equivalent to that of factory-made (FM) cigarettes’.
But the wish list doesn’t stop there because ASH also want to eliminate duty-free allowances for tobacco, tax cigarillos at the same rate as cigarettes, eliminate the significant differential in taxation with FM cigarettes, and ‘review taxes across tobacco products, in particular heated tobacco’.
In addition they want the government to review both the vape excise tax and the tax rate for nicotine pouches, which they want brought into line with the tax on vape liquids. After that, history tells us there’s only one direction that tax rates on e-liquids and nicotine pouches will go and that’s up, mimicking the tobacco playbook.
Meanwhile ASH continues to lobby for a ‘polluter pays’ levy on the tobacco companies because that’s the golden egg that that will help fund the tobacco control industry for decades to come. For more than a decade successive chancellors have rejected the idea because it’s generally accepted that a levy will be passed on to the consumer, but that doesn’t bother anti-smoking activists. It’s the perception that a levy will ‘punish’ the tobacco companies that counts, not to mention the hundreds of millions of pounds that could be used to fund the next generation of anti-nicotine warriors. Ker-ching!
ASH also wants a mandatory extended producer responsibility (EPR) duty on tobacco companies ‘to fund efforts to reduce tobacco-related litter’. Conveniently, they have ignored the fact that over the last three years UK tobacco companies have voluntarily donated a whopping £30 million to Keep Britain Tidy for exactly that purpose. But the tobacco control industry wants more, much more – £150m is one figure I’ve heard – and I very much doubt it would go to KBT to manage.
Anyway, I don’t expect tobacco to prompt many headlines tomorrow, but you never know. I’ll keep you posted.
