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Budget
CE6
09 March 1999
To reduce tobacco consumption and help ensure that young people do
not become the smokers of tomorrow, the tax on tobacco is to increase
from 6 pm today by:
- 17.5 pence on a packet of 20 cigarettes
- 7.5 pence on a pack of 5 small cigars
- 9.5 pence on a 25 gram pack of pipe tobacco
There will be no increase for hand-rolling tobacco.
The duty increase is being brought forward to Budget day to align
with the new Spring Budget cycle.
The Chancellor also announced today an independent evaluation of the
strategy and measures deployed to tackle excise duty fraud and
evasion, and in particular the growing threat of tobacco smuggling.
The Chancellor announced in the July 1997 Budget that tobacco duties
will be increased on average by at least 5 per cent a year in real
terms. The increases honour this commitment in support of the
policies set out in the Government White Paper on tobacco.
Product Basis of charge Old rate New rate Total duty
(%) change
Cigarettes ad valorem 22% of 22% of
retail retail
price price
specific #77.09 #82.59 6.3*
(per 1000)
Cigars per kilogram #114.79 #122.06 6.3
Hand-rolling per kilogram #87.74 #87.74 0
tobacco
Other smoking per kilogram #50.47 #53.66 6.3
(including
pipe tobacco)
and chewing
tobacco
* The duty on cigarettes has ad valorem (% of price) and specific
(per cigarette) elements. Raising the specific duty by approximately
7.1 per cent and maintaining the ad valorem duty at 22% increases the
total duty by about 6.3 per cent. The duties on all other tobacco
products are wholly specific.
NOTES FOR EDITORS
1. Cigarette duty will increase by approximately 5 per cent in real
terms from 6pm today 9 March 1999. There is no increase for
hand-rolling tobacco. The duties on cigars and on other smoking
tobacco and chewing tobacco will increase by 5 per cent in real
terms.
2. The RPI impact of the changes is estimated to be +0.18 per cent.
3. The Chancellor's decision to increase duty rates for most tobacco
products with effect from Budget day, is part of his strategy for
aligning excise duty increases with the new Spring Budget cycle.
Making the change this year further supports the Government's health
objective of cutting the rates of death and disease attributable to
smoking. It should also help to reduce the large scale clearance
of tobacco products by the trade in advance of a duty increase.
4. The Government takes the challenge posed by smuggling extremely
seriously. Following the Alcohol and Tobacco Fraud Review, the CSR
provided for #35 million additional resources, including over 100
extra Customs officers, to tackle excise duty fraud and evasion. In
addition, an independent evaluation will be undertaken of the scope
for improving the effectiveness of measures in this area and the
deployment of resources, concentrating on the growing threat of
tobacco smuggling by organised crime. The evaluation will take as
given the Government's policy on the rates of excise duties.
5. Details for traders are published in Budget Notice 81/99, which is
available from Customs and Excise Business Advice Centres and from
the Customs and Excise Internet site.
Press enquiries only to HM Customs and Excise, Public Relations
Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ.
Telephone: 0171 865 5471/5472
Others should contact their local Excise and Inland Customs Business
advice Centre, listed under Customs and Excise in the telephone book.
Customs and Excise Internet address:
http://www.hmce.gov.uk/
This news release can also be found at:
http://www.hm-treasury.gov.uk/
Other Treasury material can also be found at this address.
# = pounds sterling
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