Clause 1 - Rates of tobacco products duty
Finance Bill
10:00 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
No. Let me finish this point. The hon. Gentleman asked about the price of cigarettes in other European countries. It was a shame that no one from the Front or Back Benches of his party was in Committee last week when we considered the question that he now asks about the position of the 10 accession countries that have just joined the European Union. We considered price levels in those countries and—he obviously is not aware of this—the basis for maintaining quantitative cigarette restrictions on travellers from eight out of those 10 countries.
There was no Liberal in that Committee. We had a full debate as it was a very serious issue, and it dealt with some of the questions that the hon. Gentleman has raised this morning. For his information, we discussed the fact that in Latvia the current price of a packet of 20 cigarettes is 40p; that in Lithuania it is 55p; and that eight out of those 10 countries have taken advantage of a derogation that allows them to avoid setting the minimum duty rate for tobacco, which European rules insist upon, for a period in which they bring their own levels up to the European minimum. The hon. Member for Hertford and Stortford played a very important part in the scrutiny of that measure.
That Committee discussed and agreed that the UK was right. Indeed, other member states from the original 15 have taken advantage of an agreement that allows us to maintain quantitative restrictions on the number of cigarettes and the amount of tobacco that people bring back from those countries until they meet the minimum duty levels.
The hon. Member for Yeovil asked for figures on cost. If the UK were to reduce our tobacco duty levels to that of the EU 15 average and not include the 10 accession states, the cost would be between £2 billion
and £2.5 billion. As the right hon. Member for Fylde put it so succinctly, it is down to those who advocate that move to explain where revenues would be raised from to compensate for the revenue that was not available for the public purse.