Tobacco tax rises welcomed by ASH and SPECTRUM but concerns raised

Tobacco tax rises welcomed by ASH and the SPECTRUM public health research consortium but concerns raised about failure to reinstate funding to help smokers to quit and prevent youth uptake.

15 March 2023

Action on Smoking and Health (ASH) and SPECTRUM welcomed today’s increase in tobacco taxes of 2% above inflation (RPI) for cigarettes. For this year that will mean 95 pence increase on a pack of 20 cigarettes.

Reducing the affordability of tobacco is recognised to be the most effective way of reducing smoking prevalence and the higher the escalator above inflation, the greater the impact it has and the greater the potential to save lives.

However, we are disappointed that the Chancellor did not accept our recommendation to change from RPI to average earnings as the foundation for the tobacco tax escalator. RPI is not a good measure of affordability particularly at the current time when wages are not keeping pace with inflation.

Funding to deliver a smokefree 2030

There is also disappointment at the failure to reinstate funding for tobacco control in the public health budget announced yesterday.

The government has committed to respond to the Khan review on making smoking obsolete and publish its plans to deliver a smokefree 2030 in ‘coming weeks’. However, without an ambitious new strategy and the additional funding recommended by Khan of £125 million a year, Cancer Research UK has estimated that on current trends the government won’t achieve its smokefree 2030 ambition until 2039.

That is why ASH and SPECTRUM called on the government to introduce a 'polluter pays' levy on tobacco transnationals which could raise more than five times the amount called for by Khan. The Government is not proceeding with a levy, so it needs to find the funding needed from government coffers.

The £125 million a year recommended by Khan is only 1% of the £11 billion smokers paid HM Treasury in 2022 (excise taxes come out of the pockets of smokers not the tobacco industry). Between 2015/16 and 2022/3 while tobacco taxes increased significantly, funding for public health was cut in real terms by 24% with the biggest cuts falling on smoking cessation services and tobacco control which declined by 41%. The public health grant announced yesterday did not even match inflation, meaning a further real terms cut in funding this year and next.

Further cuts in funding for public health and tobacco control this year and next is the falsest of false economies. Analysis by Landman Economics for ASH shows that investing £125 million a year to deliver the government’s smokefree 2030 ambition, which is just 1% of the money raised by tobacco taxes, would provide a net benefit to public finances of £5.3 billion by 2030. This amounts to a return on investment for public finances of 5 to 1.

Hand Rolled Tobacco (HRT) and Minimum Excise Tax (MET)

ASH and SPECTRUM welcomed the uprating of MET on cigarettes. The new MET will be £7.87 (previously £6.95) for a pack of 20.

Increasing the MET raises the price of the cheapest cigarettes and discourages smokers switching to cheaper brands instead of quitting smoking altogether. This effectively means the lowest price for a pack of 20 cigarettes will be £11.97 from 6pm today.

The higher increase of 6% above RPI for hand-rolled tobacco was also welcomed. The increase will mean an extra £1.75 on a 30g pouch of tobacco from 6pm today. However, ASH urged the government to commit to the additional increase in tax on handrolled tobacco for the duration of this Parliament.

The additional increase to handrolled tobacco taxation is welcome, but the continued tax gap on handrolled tobacco has kept smokers smoking who might otherwise quit. Thousands of smokers have switched to cheaper hand rolled tobacco in recent years The Government needs to commit to an annual additional increase on handrolled, until the tax on handrolled tobacco is equivalent to that for factory made cigarettes.

Related links

Read the announcement in full | ASH announcement

ASH and SPECTRUM Budget representation, February 2023