Clause 1 - Rates of tobacco products duty
Finance Bill
11:30 am
Mr Mark Hoban (Fareham, Conservative)
I add my welcome to those of other hon. Members, Mr. Gale, and I look forward to working under your chairmanship in the weeks ahead. I tackle my first Finance Bill with some trepidation, having had occasion from time to time, as
an accountant, to bemoan its predecessors for their impact on the clients that I dealt with.
On cigarette duties, I hope that the Government explain in more detail how they have come to consider the revalorisation of excise duties on tobacco. Valid points have been made about the impact of the increase on smuggling. It would be valuable if the Financial Secretary explained what process the Government went through and their thinking on the balance between the impact of increased tobacco duties on smuggling and on consumption in respect of those who buy tobacco from normal outlets. That is an important issue, although I wish to avoid a debate on elasticities that I last encountered as an economics student at university. There are important trade-offs to consider here.
As the hon. Member for Wimbledon (Roger Casale) said, in addition to the more normal smuggling routes, such as white vans crossing the channel, there is now the internet, which facilitates more efficient and perhaps more anonymous cross-border cigarette transactions. In the context of the Government's tobacco smuggling strategy, what action are they taking to reduce the internet's impact on smuggling and importing cheap tobacco to the UK to avoid the very high duty rates incurred in this country?
The hon. Member for Dundee, East alluded to the resources available for Customs and Excise to tackle smuggling, referring to north-east Scotland. Will the Financial Secretary outline what additional resources will be available to Customs and Excise to tackle any smuggling increase and to ensure that we claw back some of the lost revenue to which my hon. Friend the Member for Christchurch referred? Tackling smuggling is important, but my concern is that Customs and Excise is under-resourced for that, so I should be interested to hear in more detail what plans there are to tackle it. If we increase tobacco tax, that will increase the incentive to smuggle to avoid the high duty. We must ensure that counter-measures are in place to restrict that.