Finally someone in the House of Commons has woken up to the fact legislation on tobacco tax (and indeed plans for plain packaging) have serious drawbacks.
The main reason that people resort to buying tobacco on the black market is the excessively high rate of taxation. 85% taxation is extremely excessive by anyone’s standards and openly encourages tax avoidance.
The lesson was hard learned in the 18th century. As a result of the Napoleonic wars alcohol, textiles, and tobacco imports were embargoed by the Government. This resulted in a very lucrative smuggling trade, and in the establishment of what is now HM Customs and Excise. Some of the wealthiest families in the country gained their wealth through smuggling during this period.
This was also the reason for the levying of taxation on embargoed goods , initially at very high rates. Even with the Revenuers working flat out, sufficient contraband got through to meet demand, making a small number of families very rich. Eventually the only way the government could make any headway with the smuggling problem was to reduce taxation on goods.
This is the situation we are in today. Over taxation of tobacco products has created this problem. HM Government has just two options. They can continue to listen to ASH and the WHO’s Framework Convention on Tobacco Control and increase taxation and increase smuggling. Or they can use their predecessors’ solution and lower taxation and price the smugglers out of the market. They may discover that they can actually make more revenue with a lower tax rate, helping to alleviate the country’s economic problems. Smokers would be less inclined to source often harmful illicit tobacco, and the cost burden on Customs and Excise and the Border Control Force would be reduced. For the party that implements such cuts it may even ensure sole tenure as the Government du jour!