THE price of the cheapest packet of cigarettes has risen by around 35p following the Chancellor’s decision to introduce a new minimum excise duty.
The Budget measure was cautiously welcomed by anti-smoking campaigners, but the tobacco industry called it “a green light to smugglers” which disproportionately hit poorer smokers.
Philip Hammond said: “I am introducing a new minimum excise duty on cigarettes, based on a pack price of £7.35, and I can also confirm that I will make no changes to previously planned upratings of duties on alcohol and tobacco.”
The tobacco tax “escalator” means a tax rise of 2 per cent above RPI inflation - equivalent to a 5.9 per cent hike on for all tobacco products.
Anti-smoking charity Action on Smoking and Health said the new minimum price will prevent the industry approach known as “overshifting” - where tax rises are absorbed on the cheapest brands to keep prices low and hiked on premium brands.
ASH has called for an increase in the escalator to RPI plus 5 per cent and for a rise of 15 per cent above inflation on rolling tobacco.
ASH chief executive Deborah Arnott said: “We’re delighted that the Chancellor has ignored the self-serving calls from the tobacco industry and its front groups to drop the tobacco tax escalator.
“We’re also pleased he has introduced a Minimum Excise Tax on cigarettes.
“But we really wanted to see sharper tax rises on all tobacco products, and in particular a larger rise on tax on hand-rolled tobacco.
“The danger is that smokers on lower incomes may shift from cigarettes to HRT in even greater numbers than before.”
Pro-smoking organisation Forest said the Budget was “bad news for law-abiding, low paid smokers” and would "disproportionately hit lower-earning smokers” as it won’t affect premium brands.
Giles Roca, director general of the Tobacco Manufacturers' Association, said: “This will simply encourage people to buy from the black market and takes business away from the legitimate trade whilst costing the taxpayer around £2.4bn in lost taxes in the last year alone."
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