Monday 21 November 2016 11:24 am

British American Tobacco says a minimum excise tax in the Autumn Statement would only fuel the black market


I am a journalist for City A.M. reporting on the energy and mining sectors. I also keep an eye on the pharmaceuticals sector and cryptocurrencies. Email: courtney.goldsmith@cityam.com

I am a journalist for City A.M. reporting on the energy and mining sectors. I also keep an eye on the pharmaceuticals sector and cryptocurrencies. Email: courtney.goldsmith@cityam.com

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UK smokers face a triple whammy in 2017 ahead of Philip Hammond's Autumn Statement, a British American Tobacco spokesperson said.

With a duty escalator expected and more limitations to come from the EU's tobacco products directive, BAT said the minimum excise tax proposed by former chancellor George Osborne should be dropped.

The minimum excise tax is effectively a floor price that would hike the price of value-for-money brands in an effort to encourage smokers to quit rather than switch to cheaper brands.

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Will Hill is a spokesperson for BAT who said the company, which has a stake in low cost options, would urge the government not to introduce the proposed tax.

Research for the tobacco company by KPMG also showed the tax could increase activity in illicit trading. The study said British smokers who buy low cost brands are more likely to fall into the black market than to quit smoking.

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If set at the wrong level, the research shows the tax could cost the Treasury £1.2bn between 2017 and 2020.

The Treasury lost more than £31bn in tax revenue between 2010 and 2015 due to high taxes on alcohol and tobacco, a report by the TaxPayers' Alliance said.

The company also said the minimum excise tax would run counter to Theresa May's assurances of a government that works for the many and not just the privileged few.

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