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21 MARCH 2000 BUDGET- TOBACCO INCREASES TO UNDERPIN ANTI-SMOKING STRATEGY & RAISE MONEY FOR NHS

The Chancellor has today raised tobacco taxes by 5% on top of inflation, to support the Government’s anti-smoking strategy. This will raise UK Pounds 235 million next year and UK Pounds 405 million in 2001/02 which will be included in the extra UK Pounds 2 billion for the National Health Service.

DETAILS

The measure raises UK Pounds 235 million in 2000/01 and UK Pounds 405 million in 2001/02. This will be included in the extra UK Pounds 2 billion the Chancellor announced today for the National Health Service.

This will put 25p onto the price of a packet of cigarettes.

Smoking is the single greatest cause of preventable illness and premature death in the UK. Tobacco use is detrimental to health with significant wider social costs. Duty increases raise the price of cigarettes and tobacco which supports the Government’s strategy to reduce smoking. The Government believes that there is a strong ongoing health case for year-on-year real terms increases in the price of cigarettes and other tobacco.

The tax* on tobacco is increased from 6 pm today by:

25 pence on a packet of 20 cigarettes;
8 pence on a pack of 5 small cigars;
22 pence on a 25 gram pack of hand-rolling tobacco; and
13 pence on a 25 gram pack of pipe tobacco

*Tax includes duty and VAT. The duty on cigarettes has ad valorem (% of price) and specific (per cigarette) elements. Raising the specific duty by approximately 6% in real terms and maintaining the ad valorem duty at 22% increases the total duty by about 5% in real terms. The duties on all other tobacco products are wholly specific.

NOTES FOR EDITORS

1. The Chancellor forms his judgements on the appropriate rates of duty taking into account a wide range of factors including the Government’s health objectives.

2. The Government is committed to reducing levels of smoking, the White Papers, “Smoking Kills” and “Saving Lives”, set out ambitious targets for reducing smoking related diseases. Further announcements will follow tomorrow on additional health spending.

3. Increasing duty rates for tobacco products supports the Government’s strategy for reducing smoking and cutting the rates of death and disease attributable to smoking. It raises the price of cigarettes and tobacco which acts as a deterrent to smoking.

4. Following this duty increase the retail price of cigarettes will have risen by 25% in real terms since May 1997.

5. The Government is fully aware of the threat that smuggling poses to this policy. Further announcements will follow tomorrow on how this will be tackled.

6. The duty on cigarettes, cigars, hand-rolling tobacco, and on other smoking tobacco and chewing tobacco will increase by approximately 5% in real terms from 6 pm today 21 March 2000.

7. The RPI impact of the changes is estimated to be +0.08%.

8. Details for businesses are available in Budget Notice 36/2000 which is available from Customs and Excise Advice Centres and from the Customs and Excise Internet site.

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