UK: Tobacco Tax Gap Stands At ￡2.4bn

Source from:  Talking Retail 10/31/2017

The tobacco tax gap, the difference between the amount of tax due and the amount collected, is estimated to be ￡2.4bn, according to latest HM Revenue & Customs (HMRC) figures.

The data reveals the illicit market in cigarettes and hand-rolling tobacco resulted in ￡1.9bn in duty and ￡0.5bn in VAT being lost in 2015-16 – the latest figures available.

The cigarette tax gap was estimated to be ￡1.6bn in 2015-16, while the hand-rolling tobacco tax gap was estimated to be ￡800m in the 12-month period.

A spokesperson for the Tobacco Manufacturers’ Association said:  “These figures confirm that the government’s high tax strategy on tobacco is simply driving smokers to seek out cheaper alternatives from the black market and abroad.

“Recent research showed 41% of smokers had bought tobacco from the black market over the last year. That’s not surprising with tax accounting for around 80% of the price of tobacco, the second highest in the EU, and which on cigarettes has increased by 65% in the last seven years and on hand rolling by more than 75% over the same time.

“Since 2000 the total tax lost through tobacco smuggling is ￡43.5bn. It is imperative that the government should halt any further duty increases starting at next month’s budget and review its entire strategy if it is to protect future tax revenues and effectively tackle the black market.”

Meanwhile, the HMRC figures showed the estimated beer tax gap stood at about ￡750m for the 2015-16 period. The market in illicit beer resulted in estimated losses of ￡500m in duty and ￡200m in VAT.

In addition, the wine tax gap was about ￡200m in the 12-month period, with ￡120m in duty and ￡80m in VAT lost.

A further ￡220m in duty and ￡130m in VAT was lost on illicit spirits, as the tax gap stood at around ￡350m for 2015-16.  Enditem