A group of MPs want the tax rate on cigarettes and other tobacco products to be increased to reduce the number of people smoking and raise £100m for the Treasury to spend on anti-smoking projects.
The All Party Parliamentary Group (APPG) on smoking and health has suggested tobacco tax be raised to five per cent from the current rate of two per cent above inflation.
They believe the move would increase the money reaped by the Treasury from £200m to £300m and would fund further spending on projects that help people kick the habit.
Chairman of the cross-party group and MP for Harrow East Bob Blackman told the BBC:
"Smokers don't just die early, they suffer many years of disease and disability before they do, putting pressure not just on the NHS, but additional disability and social care costs and reduced income tax. Every pound invested over the next five years could deliver £11 to the public purse."
The Tobacco Manufacturers' Association however, criticised the proposals for being "economic illiterate" and "counterproductive" and that increasing tobacco tax costs the Treasury millions of pounds.
"That’s because tax on tobacco has increased by over 40 per cent over the last five years, making UK tobacco the most expensive in Europe," said the group's director general Giles Roca.
"Smokers are then increasingly switching to cheaper and often illegal products, which loses the Treasury some £2.6bn each year. Small shops also suffer as they struggle to compete with illegal traders selling products at less than half the legitimate retail price. Rather than imposing yet more tax on a legitimate UK sector, which directly and indirectly supports over 60,000 jobs and generates over £12bn in tax revenue, the UK Government would be better served by holding an independent review of tobacco tax policy.”
The MPs' report on the proposed tax hike has been submitted to the Treasury's comprehensive spending review ahead of the Chancellor's Autumn Statement.