Tobacco Companies Secret Business, UK Tobacco Trade
The number of cigarettes bought in the UK which have avoided submission and taxes is set to increase, one of the country’s top three companies has warned. Japan Tobacco International, the owner of UK-based Gallaher, conducted a secret shopping trip around north-west London that revealed a big range of fake cigarettes and rolling tobacco being sold for approximately half the retail price. These include well-known smoking brands where the pack design is written in Spanish but the tax stamp is Belgian and rolling tobacco which contains large amounts of impurities. The firm believes that after two of the largest duty hikes in the past two Budgets – a total of 70p on a package of 20 – the rate of smuggling and production of counterfeit cigarettes will rise.
Recent study showed that 23.3 percent of cigs smoked in London and a staggering 44 percent of rolling tobacco had avoided UK taxes. That is almost 50 percent higher than the national average of 16.4 percent. It is estimated that nationally the Treasury lost £2.9bn last year from the unlawful tobacco trade. Indications that the scale of the illicit trade is escalating are on the rise. In the past 10 months Her Majesty’s Revenue & Costumes has seized more than one million counterfeit rolling tobacco pouches being smuggled into the UK to be filled with illegal tobacco products.
A recent court case which saw the leaders of a 10-man gang running an illicit cigarette firm in Chesterfield jailed, heard it made an estimated profit of £120m a year and robbed the Treasury of more than £130m in tax. Martin Southgate, JTI’s UK managing director, believes moves to introduce plain pack do not help. He declared: “These new ordinances will not help reach a decline in youngsters taking up smoking habit, this will only increase the illegal trade in tobacco.” The Government was due to have published its response to a consultation paper from the Department of Health earlier this month but appears to have delayed it once again. Imperial Tobacco boss Allison Cooper has by this time threatened to take legal new action if the Government presses ahead with plans to force cigs to be sold in unbranded pack. She reported that the move could furnish a “stimulus” for illegal cigs.
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