Cigarette Price Rises in UK due to Companies as Much as Tax

Source from:  Financial Times 08/13/2013

Smokers fuming about the rising cost of cigarettes should blame big tobacco companies as well as recent excise duty increases, according to researchers at the University of Bath.

Between 2006 and 2009, about half of the total price increases on cigarettes were due to tobacco companies raising their prices, not increases in duty, according to its research.

The report comes as the tobacco industry goes to great lengths to argue that the increased cost of cigarettes has led to higher levels of imitation or smuggled cigarettes.

Amanda Sandford, research manager at Action on Smoking and Health, said: "This analysis makes it clear that the companies have been hiking their own prices as fast as they can. Clearly, they are not as worried about the effect of price rises on illicit trade as they want the public to think."

Research from tobacco companies such as JTI, which make Benson & Hedges, and Philip Morris International, which sell Marlboro outside the US, have attempted to link higher prices with increased smuggling.

While the proportion of illicit tobacco smoked in the UK has increased, according to tobacco industry funded research, the total amount of non-duty paid tobacco is falling, figures from HMRC show.

The government has raised duty on tobacco products consistently even as it cuts duty on other products, such as beer.

The excise duty on tobacco products raised £9.5bn between 2011 and 2012, according to the Tobacco Manufacturers' Association. This is up from £8.1bn in 2007, despite the number of cigarettes smoked in the UK falling.

Paul Williams, head of corporate affairs at JTI, said: "ASH is proving yet again that there is little point in letting facts get in the way of a story; 85 per cent of every legal cigarette pack is tax and that encourages criminals to trade in the UK."

The study comes after a similar survey in Ireland revealed that price rises from tobacco companies accounted for 36 per cent of increased cigarette costs. Enditem