The Centre for Social Justice has called on HMRC to rethink how it measures the tobacco tax gap and consider limiting future duty hikes to inflation. HMRC essentially estimates how many cigarettes are smoked, subtracts legal sales, and labels the rest the black market. The calculation relies heavily on telephone surveys asking people about their smoking and purchasing habits. Quite how many people buying illicit cigarettes are going to admit it in a government phone survey is another question…
The think tank’s report, Hijacked High Streets: A plan to Repair Britain’s Broken High Streets, explains:
“HMRC should launch an independent review of its methodology for measuring tax gaps and assess the reliability of estimates produced under its current approach…Where the evidence suggests the disbenefits outweigh the public health gains, HM Treasury should pause the tobacco duty escalator in favour of an inflation-only increase in tobacco duty and should review the rate at which the Vaping Products Duty is set.”
The report also quotes a Trading Standards officer warning: “The amount of criminality in [locality], and across the rest of the country, it’s unprecedented. I’ve been in the service 34 years, it’s quite a change in the high street…the tobacco business is completely run by [organised crime groups] there is no doubt about it.”
What was it Burnham said about making the high streets “the symbols of Britain’s renaissance”? Meanwhile, the Australian Senate Legal and Constitutional Affairs References Committee recommended the government there “immediately pause any further increases to the tobacco excise, including through regular indexation, until meaningful elimination of the illicit tobacco market can be achieved.” An estimated 80% of cigarettes and nicotine products consumed in Australia are now illicit…
Both Australian opposition parties have now backed cuts to tobacco excise, with the Liberal-National Coalition pledging an 80% reduction and One Nation proposing a 75% cut to bring smokers back from the black market and into the legal, tax-paying market. Are Reform and the Tories watching?
Former Treasury minister and adviser to Burnham in the Makerfield campaign Lord Jim O’Neill, who has turned down a role in his government, said Burnham’s first statement Commons was:
“The last thing investors wanted to hear… gilt yields have risen by a 0.25% in one day, which is a lot. We’ve not had that since Liz Truss days… If your country is under the focus of ‘can they come up with a sensible fiscal strategy’ on a day when the markets think ‘well no, you’re not showing any sign of it’ you’re going to have a tough day…if it stays like this your mortgage rate is going up.”