Tobacco duty rise to take effect on 16 November

The government has announced increases to tobacco the duty rates, which will have effect from 16 November.

The duty rate on all tobacco products will increase by 2 per cent above Retail Price Index (RPI), hand-rolling tobacco will rise by an additional 4 per cent, to 6 per cent above RPI inflation and the Minimum Excise Tax (MET) by an additional 2 per cent, to 4 per cent above RPI inflation this year.

The government said increasing hand-rolling tobacco and MET above the duty escalator will narrow the gap between hand-rolling tobacco and cigarette duty rates, and ensure the MET continues to be effective in the current market.

Responding to the development, the Association of Convenience Stores (ACS), however, warned that the increase in duty rates will drive more consumers to the illicit tobacco 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 per cent duty increase,” commented James Lowman, ACS chief executive.

“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 said the HM Revenue and Customs will monitor and respond to any potential shift in illicit consumption as part of its strategy to combat tobacco fraud.