Cigarette Duty Increase Kicks In

Cigarette Duty Increase Kicks In

The duty rate on all tobacco has increased from Monday 16th November 2020.

The Association of Convenience Stores warned that the new government increases in duty rates on tobacco products will drive more consumers to the illicit tobacco market. On November 12, the government announced that the duty rate on all tobacco products will increase by 2% above Retail Price Index (RPI), hand-rolling tobacco will rise by an additional 4%, to 6% and the Minimum Excise Tax by an additional 2%, to 4% above RPI inflation this year.

Illicit market

“We know that sharp increases in tobacco duty push consumers to the illicit market, and this is especially prevalent in the hand rolling tobacco market where the government have introduced 4% duty increase,” said ACS chief executive James Lowman.

“The illicit trade in tobacco brings criminality into communities and is extremely damaging to legitimate retailers. We need more enforcement, not higher duty rates, to tackle this problem.”

The government statement said: “The government is committed to maintaining high tobacco duty rates as this is an established tool to reduce smoking prevalence and to ensure that tobacco duties continue to contribute to government revenues.

“Increasing hand-rolling tobacco (HRT) and Minimum Excise Tax (MET) above the duty escalator will narrow the gap between HRT and cigarette duty rates and ensure the MET continues to be effective in the current market.”

Tobacco fraud

HM Revenue and Customs (HMRC) will monitor and respond to any potential shift in illicit consumption as part of its strategy to combat tobacco fraud.

Ironically the ACS fears are confirmed when two men were jailed in Northern Ireland for an illegal underground tobacco factory, discovered in County Armagh by HM Revenue & Customs (HMRC).

Reinolds Kondrats and Germans Solovjovs were arrested at a house on the Ballynaclosha Road in Silverbridge in November 2019.

Searches of an outhouse revealed cigarette manufacturing machinery, concealed in an underground concrete bunker and accessed via a hidden door. The men were charged with tax evasion and both pleaded guilty to all charges and were sentenced to two years imprisonment.