Writing in today’s Financial Times Tim Lord said in a country like Spain, which has a much lower cigarette tax rate than Britain, just 2% of cigarettes smoked their had evaded duty.
In comparison, more than one-in-four cigarettes smoked in the UK are duty free, 7% bought legally across the border, and a massive 21% smuggled in.
‘The reason the UK’s level of smuggling is so high is that the Treasury has imposed excise duties so high that retail prices in the UK are the highest in the world,’ Lord said.
He claimed the solution, recommended by the TMA, was for the Treasury to cut the price of a pack of 20 cigarettes by £1 to return the gap between UK and other EU markets to pre-1997 levels.
Does Darwin's theory apply to taxation? Colin ponders...
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