Budget 2011: Tobacco industry furious at tax rises

The tobacco industry has reacted with fury at tax increases that have heralded the arrival of the £7 packet of cigarettes in the UK.

From 6pm Wednesday night, duty on tobacco rose by 2pc above inflation. On top of this, a wider restructuring of duty added 50p to the price of a packet of "economy" cigarettes and 33p to "premium" cigarettes, meaning that poorer smokers will be disproportionately affected.

So-called economy cigarettes include brands such as Windsor. After Wednesday's duty increase their price rose from £5.13 to £5.63, while premium brands increased from £6.62 to £6.95. In addition, the cost of a packet of hand-rolling tobacco rose by 67p, a pack of five small cigars rose 10p and a pack of pipe tobacco rose 17p.

Simon Clark, a director at Forest, the smokers' lobby group, said: "The policy discriminates against those who can least afford it, especially the elderly and the low paid."

JTI, the international arm of Camel and Silk Cut-maker Japan Tobacco, hit out at what it called "the single largest increase in tobacco duty by any UK Government". It said cigarettes in the UK are up to three and half times more expensive than in many other European countries.

Martin Southgate, managing director of JTI UK, said that the increase will simply fuel the black market: "This price rise - if combined with proposals for out-of-sight plain packs - will only provide crooks, criminal gangs and counterfeiters with the opportunity to set up shop across the UK."

Christopher Ogden, chief executive of the Tobacco Manufacturers' Association said the tax rise "clearly demonstrates a complete lack of joined-up-thinking as taxation is the driver of the illicit tobacco trade".

The measures should raise an extra £355m for the Government by 2015.

source: www.telegraph.co.uk