HM Customs and Excise 7
17 March 1998
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TOBACCO AND HEALTH - SMOKERS TO PAY MORE
The Chancellor announced today that, as part of the
Government's determination to reduce tobacco consumption and
ensure that young people do not become the smokers of
tomorrow, the tax (duty and VAT) on tobacco is to increase
from 1 December 1998 by:
21 pence on a packet of 20 cigarettes
9 pence on a pack of 5 small cigars
12 pence on a 25 gram pack of pipe tobacco
There will be no increase for hand-rolling tobacco.
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.
DETAILS
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Product Basis of charge Old rate New rate Total
(pounds) (pounds) duty change
(per cent)
_____________________________________________________________
Cigarettes ad valorem 21 per cent 22 per cent
of retail price of retail price
specific 72.06 77.09 8.4 *
(per 1000)
Cigars per kilogram 105.86 114.79 8.4
Hand-rolling per kilogram 87.74 87.74 0
tobacco
Other smoking per kilogram 46.55 50.47 8.4
(including pipe
tobacco) and
chewing tobacco
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* The duty on cigarettes has ad valorem (per cent of price)
and specific (per cigarette) elements. Raising the specific
duty by approximately 7 per cent and the ad valorem duty by
one percentage point increases the total duty by about 8.4
per cent. The duties on all other tobacco products are
wholly specific. The increase in the ad valorem element of
the duty on cigarettes is necessary to keep the specific duty
component, as a proportion of the total tax burden, within
the agreed limits set in the EC directive. The commitment to
real increases of at least 5 per cent could not have been
met without increasing the ad valorem element of the duty.
NOTES FOR EDITORS
1. All tobacco duties excluding hand-rolling tobacco are
increased by approximately 5.2 per cent in real terms.
There is no increase for hand-rolling tobacco.
2. The estimated revenue yield of these changes is nil on an
indexed base in 1998/99, 1999/2000 and 2000/01, and 25
million pounds on a non-indexed base in 1998/99. The full
year revenue yield in 1999/2000 on a non-indexed base is 710
million pounds.
3. The RPI impact of the changes is estimated to be + 0.21
per cent.
4. Details for traders are available in Budget notice BN
4/98, 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 5468/5471
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.open.gov.uk/customs/c&ehome.htm
This news release can also be found at:
http://www.hm-treasury.gov.uk. Other Treasury material can
also be found at this address.