1. This clause increases the rates of excise duties on all tobacco products (cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco) with effect from 6 pm on 21 March 2000.

DETAILS OF THE CLAUSE

2. Sub-section (1) sets out a Table of duty rates to replace that in Schedule 1 to the Tobacco Products Duty Act 1979. The duties on all tobacco products are increased as follows:

(a) cigarettes - the ad valorem duty is unchanged at 22 per

cent; the specific duty is increased by approximately 9.5 per

cent from £82.59 to £ 90.43 per thousand cigarettes;

(b) cigars - increased by approximately 8.4 per cent from

£122.06 to £132.33 per kilogram;

(c) hand-rolling tobacco - increased by approximately 8.4

per cent from £87.74 to £95.12 per kilogram; and

(d) other smoking tobacco and chewing tobacco - increased

by approximately 8.4 per cent from £53.66 to £58.17 per

kilogram.

3. Sub-section (2) makes the new table of duty rates effective from 6 pm on 21 March 2000.

BACKGROUND

4. The Government is fully committed to reducing smoking and meeting its targets to cut deaths from cancer and coronary heart disease. These increases complement the Government’s integrated policy to reduce tobacco consumption and demonstrate it is serious about tackling the deaths, disease, and wider social costs attributable to smoking.

5. The duties on cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco are increased by approximately 8.4 per cent (5 per cent in real terms).

6. The duty on cigarettes has ad valorem (% of price) and specific (per cigarette) elements. Raising the specific duty by approximately 9.5 per cent and maintaining the ad valorem duty at 22% increases the total duty by approximately 8.4 per cent. The duties on other tobacco products are wholly specific.

7. The estimated full year revenue yield of these changes is

£ 645 million on a non-indexed base in 2000/2001. On an indexed base it is worth £ 235 million in 2000/2001, £ 405 million in 2001/2002, and £ 415 million in 2002/2003. The RPI impact of the changes is estimated to be +0.21 per cent.