Responding to yesterday’s Budget, tobacco and vape companies lamented the lack of action against illegal products – and even the indirect encouragement to the black market given by the taxation strategies outlined by Rachel Reeves, together with the lack of support for enforcement agencies such as Trading Standards.
Stephane Berset, Managing Director of JTI in the UK, said that he was pleased to see the Government take a more proportionate approach to the annual uprating of tobacco duty at Budget 2025 and Budget 2026, maintaining all tobacco products at RPI +two per cent, “as well as taking further enforcement action and introducing a licensing scheme to address the dramatic growth of the illegal tobacco trade(3), on our high streets and in our communities.”
However, he continued that, “The now confirmed double taxation for Budget 2026 completely undermines this approach. The Government already acknowledges that nearly a quarter of hand rolling tobacco is smuggled, and the reality on our high streets is much worse.
“With increases already planned for next year of £1.21 on a pack of 20 cigarettes and £2.54 on a packet of hand-rolling tobacco,” he said, “the Chancellor is simply adding fuel to the fire of illegal tobacco, handing cash to those organised criminal gangs behind it – gangs that the Government says it wants to protect communities and legitimate business against.
Berset said that JTI UK is calling on the Government to reverse the decision to implement the additional one-off tax on all tobacco products next year, “which unnecessarily widens the price between legitimate and illegal products further”.
PML's Catherine Goger
At Philip Morris Ltd (PML), Illicit Prevention Manager Catherine Goger agreed that while the budget was rightly concerned with raising money to fix the economy, "One area that has been neglected once again is tackling the scourge of illicit cigarettes and vapes. Each year the Exchequer loses over £2 billion in revenue as a quarter of all cigarettes smoked in the UK are illicit. A sure-fire way in dealing both with this organized criminality and to raise more money for the whole country, would be greater investment in Trading Standards who could help stamp out this scourge. Together we can take dodgy vapes and cigarettes off our streets, out of hands of criminals, and reduce the tax burden for everyone."
Unfortunately, the advantage to smugglers and criminals – raising taxes disproportionately on legal tobacco products, while throttling funds for enforcement and inter alia threatening the livelihoods and safety of independent retailers – appears to be the Government’s confirmed policy direction for the foreseeable future.
A consultation on the upcoming Tobacco and Vapes legislation is currently underway and the committee is seeking submissions from retailers and interested parties by December 3 and responses can be submitted here. Asian Trader strongly recommends that independent retailers make their voices heard, as we will attempt also to make ours heard.