UK: Tobacco price increases outpace inflation

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

An increase on cigarettes and rolling tobacco

Cigarette taxes have been increased by 2% above inflation, following the UK's Budget discussions. These price increases took effect immediately a few hours after the vote on the bill. Given the inflation levels observed in the UK (10.1%), the average price of a pack of cigarettes is expected to increase by approximately 12%. Thus, according to the Office for National Statistics, the average price of a pack of cigarettes being approximately 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 steeper, since an increase of 6% in addition to that of inflation has been decided, resulting in an increase of nearly two euros on a thirty-gram pouch of tobacco. This decision was welcomed by the two public health organizations, which reiterated that significant tax increases remain the most effective way to reduce smoking prevalence, while the WHO encouraged public authorities to ensure that tobacco taxes increase continuously, taking into account changes in inflation and income.[2].

UK's smoking ban plan still pending

Both Ash and Spectrum, however, regret that tobacco taxes are indexed 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 organizations deplore the failure to restore funding for tobacco control in the public health budget. Between 2015 and 2022, while tobacco taxation increased significantly, public health funding was reduced by 24% in real terms. Furthermore, the public health grant has not been revalued in line with inflation levels, effectively meaning a reduction in funding. Without a coordinated and rapid plan to combat smoking, the UK is set to fall nine years behind its target of achieving a tobacco-free generation by 2030. As such, the government has committed to responding in the coming weeks to the series of proposals and recommendations on smoking in the United Kingdom, made by an independent mission.

Still no specific tax for disposable e-cigarettes

Ash and Spectrum have also come out in favor of introducing a new tax of four pounds per disposable e-cigarette (puff) to address its rapid growth, particularly among young people. According to the two organizations, such a measure would quickly reduce the accessibility of these new nicotine products, some of which can be purchased for less than five pounds (5.68 euros). The objective of introducing such a tax would also be to address an environmental issue, as these disposable electronic products, consisting of a battery, are a major source of pollution. For both Ash and Spectrum, it appears necessary for the price of these products to be at least equal to that of non-disposable e-cigarettes. At present, such a measure does not appear 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. Reactions from the alcohol industry were swift: the Scottish whisky industry called 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 this public health policy, justifying the exemption as a boost to British pubs. While alcohol consumption is a major public health issue in the UK, Jeremy Hunt concluded: "British beer may be warm, but taxes on a pint are frozen."[3].

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[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)