No: CE 16                                            28 November 1995

                         BUDGET 1995 : EXCISE

                      CHANGES IN TOBACCO DUTIES

The Chancellor announced that from 6pm tonight the tax (duty and VAT) 
on a packet of 20 cigarettes will go up by 15p.  The tax on a pack of 
5 small cigars will go up by 6p and on a 25 gram pack of pipe tobacco 
by 8p.  There will be no increase for hand rolling tobacco.

The Chancellor's decisions reflect a number of factors, including 
the need to encourage further reductions in levels of smoking.  They 
demonstrate the Government's commitment to the "Health of the Nation" 
White Paper target to reduce smoking by 40 per cent by the year 2000.  
The rate of duty on hand-rolling tobacco has been frozen because of 
the impact of smuggling of this product on a small domestic market.


NOTES FOR EDITORS

1.     The duty rates are as follows:

                              Old rate       New rate    Total duty
                              (Pounds)       (Pounds)    change
                                                         per cent                                             

Cigarettes Specific (per 1000) 57.64        62.52           
                                                         7.5 *
           ad valorem          20 per cent  20 per cent  
                               of retail    of retail
                               price        price

Hand-rolling  per kilogram     85.94        85.94        Unchanged
tobacco

Cigars        per kilogram     85.61        91.52        6.9              

Other smoking per kilogram     37.64        40.24        6.9
and chewing
tobacco (including
pipe tobacco)

* The duty on cigarettes has ad valorem and specific elements. 
Raising the specific duty by 8.5 per cent increases the total duty 
by 7.5 per cent.  The duties on other tobacco products are wholly 
specific. 

2.     A commitment to raise duty on tobacco on average by at least 3 
per cent in real terms in future Budgets was given by the Chancellor 
in his November 1993 Budget.

3.     The estimated net revenue yield from these changes is 25 
million Pounds in 1996-97 on an indexed and non-indexed base. The 
existing commitment to 3 per cent real increases (already announced, 
and therefore not scored as additional revenue) is worth 275 million 
Pounds on an indexed base and 545 million Pounds on a non-indexed 
base. The RPI impact of the changes is estimated to be +0.19 per cent 
(non-indexed) and +0.01 per cent (indexed).

4.     Details for traders are available in Budget notice BN 131 /95.








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