UK: Tobacco price increases outpace inflation

The price of tobacco rose significantly in the UK yesterday, due to the indexation of taxation to inflation levels, plus a further 2% increase in tax on cigarettes and 6% on rolling tobacco. This fiscal trajectory has been welcomed by the NGO Action on Smoking and Health (ASH), as well as Spectrum, a public health research consortium.[1].

Increase on cigarettes and rolling tobacco

Cigarette taxes have been increased by 2% above inflation, following the UK's Budget discussions. These price increases came into effect immediately a few hours after the vote on the text. Given the inflation levels observed in the UK (10.1%), the average price of a packet of cigarettes is expected to increase by around 12%. Thus, according to the Office for National Statistics, the average price of a packet of cigarettes being around 12.84 pounds, (14.60 euros), it rose yesterday to 14.36 pounds, or nearly 16.40 euros for twenty cigarettes. For rolling tobacco, the tax increase is greater, since an increase of 6% in addition to that of inflation has been decided, leading to an increase of nearly two euros on a thirty gram pouch of tobacco. The decision was welcomed by both public health bodies, who stressed that significant tax increases remain the most effective way to reduce smoking prevalence, while WHO encouraged governments to increase tobacco taxes continuously, taking into account changes in inflation and income.[2].

UK's smoking ban plan still pending

Both Ash and Spectrum regret, however, that tobacco taxes are now linked to the Retail Price Index (RPI) rather than to changes in average income, as they had proposed to Jeremy Hunt, Chancellor of the Exchequer. Furthermore, both organisations deplore the failure to restore funding for tobacco control in the public health budget. Between 2015 and 2022, while tobacco taxes have increased significantly, public health funding has been reduced by £241t3t in real terms. Furthermore, the public health grant has not been revalued in line with inflation levels, meaning that funding has been reduced. Without a coordinated and rapid plan to tackle smoking, the UK is set to fall nine years behind its target of achieving a smoke-free generation by 2030. As such, the government has committed to responding to the call in the coming weeks the series of proposals and recommendations on smoking in the United Kingdom, made by an independent mission.

Still no specific tax for disposable electronic cigarettes

Ash and Spectrum have also called for the introduction of a new tax of four pounds per disposable electronic cigarette (puff) to address its rapid growth, particularly among young people. According to the two organisations, such a measure would make it possible to rapidly reduce the accessibility of these new nicotine products, some of which can be purchased for less than five pounds (5.68 euros). The aim of introducing such a tax would also be to respond to an environmental issue, since these disposable electronic products, consisting of a battery, are a major source of pollution. For Ash as for Spectrum, it seems necessary that the price of these products be at least equal to that of non-disposable electronic cigarettes. At present, such a measure does not seem to be on the agenda.

An indexation of alcohol taxation, except for draft beer

The Budget discussions also resulted in a 10.1% increase in alcohol tax, indexing it to inflation levels. Reaction from the alcohol industry was swift, with the Scottish whisky industry calling the move a “historic coup”, while the Scottish Whisky Association (SWA) called the indexation “the wrong decision at the wrong time”. However, Jeremy Hunt announced that draught beers would not be affected by the public health policy, justifying the exemption as a boost to British pubs. With alcohol consumption a major public health issue in the UK, Jeremy Hunt concluded: “British beer may be warm, but pint duty is frozen.”[3].

FT

[1] Action on Smoking and Health (ASH), Tobacco tax rises welcomed by ASH and SPECTRUM but concerns raised, 03/15/2023, (accessed 03/16/2023)

[2] World Health Organization (WHO), WHO report on the global tobacco epidemic, 2015, (accessed 07/03/2022)

https://apps.who.int/iris/bitstream/handle/10665/178574/9789240694606_eng.pdf

[3]Independent, Duty on draft beer to be frozen to help the 'great British pub', 03/15/2023, (accessed 03/16/2023)