top of page
Lord Moylan

Written Questions: Tobacco Excise Duty

Lord Moylan: To ask His Majesty's Government what plans they have to end losses in tax revenue from tobacco duty fraud. 


Financial Secretary to HM Treasury (Lord Livermore): HM Revenue and Customs (HMRC) launched its first strategy to tackle illicit tobacco in 2000. This, and consequent strategies with Border Force, have reduced the overall tobacco duty tax gap from 21.7% in 2005/6 to 14.5% in 2022/23.

                   

During this time, the duty gap for cigarettes has reduced by a third, and for hand-rolling tobacco by a half.


In January this year HMRC and Border Force published their latest illicit tobacco strategy, ‘Stubbing Out the Problem’. This Government is committed to reducing the trade in illicit tobacco with a focus on reducing demand, and tackling and disrupting the organised crime groups behind the illicit tobacco trade.


The tobacco strategy is supported by £100 million of new smokefree funding over the next 5 years to boost existing HMRC and Border Force enforcement capability.

 

Lord Moylan: To ask His Majesty's Government what assessment they have made of the likelihood that further increases in tobacco duty rates will fail to generate further revenue.

 

Financial Secretary to HM Treasury (Lord Livermore): Under the assumptions used in tobacco costings certified by the Office for Budget Responsibility (OBR) at Spring Budget 2024, increasing overall tobacco duty rates increases tobacco duty receipts.

 

Lord Moylan: To ask His Majesty's Government what assessment they have made of the recent remarks by the Chief Executive of the Institute for Fiscal Studies on cutting the current rate of tobacco duty as a means of increasing tax revenues.

 

Financial Secretary to HM Treasury (Lord Livermore): Under the assumptions used in tobacco costings certified by the Office for Budget Responsibility (OBR) at Spring Budget 2024, increasing overall tobacco duty rates increases tobacco duty receipts.

 

Lord Moylan: To ask His Majesty's Government what estimate they have made of the annual tax revenue loss from illicit and non-duty paid tobacco.

 

Financial Secretary to HM Treasury (Lord Livermore): HM Revenue and Customs (HMRC) publish official statistics relating to measuring tax gaps, which include the estimated annual tax revenue loss from Illicit and non-duty paid tobacco.


The statistics are published annually and the latest figures are set out in Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023.


The duty gap for tobacco is estimated at 14.5% of the theoretical tobacco duty liability, or £2.2 billion (£1.7 billion in Excise Duty and £0.5 billion in VAT), in tax year 2022 to 2023.

 

Lord Moylan: To ask His Majesty's Government what consideration they have given to reducing or freezing tobacco excise duty to curtail the illicit and non-duty paid tobacco market, and to minimise the annual tax revenue loss from tobacco duty avoidance.

 

Financial Secretary to HM Treasury (Lord Livermore): Tobacco duty aims to raise revenue and reduce harm to public health by discouraging smoking and raised £10bn in 2022/23. High duty rates, making tobacco less affordable, have helped reduce smoking prevalence with the percentage of adult smokers in the UK reducing from 26% in 2000 to 12% in 2023.


Strong enforcement is essential in tackling the illicit tobacco market and minimising the tax gap. HM Revenue and Customs (HMRC) and Border Force published a new illicit tobacco strategy in January 2024, ‘Stubbing Out the Problem)’. This set out the Government’s continued commitment to reduce the trade in illicit tobacco with a focus on reducing demand, and the disruption of organised crime groups behind the illicit tobacco trade.


The strategy is supported by £100 million of new ‘smokefree’ funding over the next 5 years which will boost existing HMRC and Border Force enforcement capability.

 

 

 

 

Comments


bottom of page