TMA: Budget could lead to increase in illicit tobacco trade

Christopher Ogden, chief executive of the Tobacco Manufacturers’ Association (TMA), said in response to the Budget:

“Government has today increased tobacco duties by two per cent above inflation which clearly demonstrates a complete lack of joined-up-thinking as taxation is the acknowledged driver of the illicit tobacco trade. The refreshed tackling tobacco smuggling strategy is to be announced shortly, yet this increase will only serve to undermine the effectiveness of this strategy.

“The Irish government recognised that tax increases were driving the illicit trade in tobacco and decided not to raise duties in the last two Budgets. The Chancellor should have followed their example.

“As part of the tackling tobacco smuggling review we are working closely with HMRC on a number of specific areas. This is an extremely positive development, but since January 2010 tobacco taxes in the UK have increased more than in any other EU Member State. With the further tax rise announced today, there is great concern that the cumulative effect of these tax increases will lead to an escalation in illicit trade.”