Chancellor raises cheers from beer, cider and spirits firms but tobacco companies say illict traders will benefit
TOBACCO firms have reacted angrily to the Chancellor’s decision to raise tobacco duty in the 2014 budget.
The announcement, made last month, that duty would rise 2% above inflation sparked claims from tobacco firms that the move would make it easier and more profitable for criminals to sell illicit tobacco products.
Daniel Torras, managing director of JTI in the UK, said: “With the UK Government set to ban smaller rolling tobacco and cigarette packs and threatening to make counterfeiting cheaper and easier by introducing plain packaging, now is not the time to add a significant tax increase which will widen the price between legitimate and illegal products.
“At a time when the Government is making it harder to fake a £1 coin, it could be about to provide criminals with an invitation to further profit from fake cigarettes.”
At Imperial Tobacco, UK communications manager Gayatri Barua-Howe said: “The UK’s duties on tobacco are already some of the highest in the world making it a major target for criminals seeking profit from illicit tobacco. This costs the Government almost £8m a day, not to mention the effect on retailers’ incomes.”
But alcohol firms expressed their delight at George Osborne’s decision to cut beer duty by 1p per pint and freeze duty on spirits and ordinary cider. Osborne also announced the end of the alcohol duty escalator that had ensured alcohol taxes rose above the rate of general inflation.
David Forde, UK managing director for Heineken, said: “I will be raising a cold pint to the Chancellor, his announcement on cider and beer duty will be cheered at breweries, pubs, bars and living rooms across the UK.”
Andrew Cowan, country director for Diageo GB, also praised the changes. He said: “The Chancellor has given a huge boost to one of Britain’s most successful industries. From Scotch whisky to London Gin, British spirits are admired and enjoyed around the world. In freeing the industry from a debilitating tax policy the Government has given a show of support for these quality products. ”
As well as changes to alcohol and tobacco, the Chancellor also announced that the rise in fuel duty planned for September would no longer take place.
He also promised a £7bn package to cut energy bills and said the point at which people will start paying income tax will rise to £10,500 from April 2015.
A new £1 coin, resembling the old 12-sided threepenny bit that was withdrawn at the time of decimalisation in 1971, will be introduced in a bid to beat counterfeiters. It’s due to be in purses and pockets from 2017.