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Tobacco: Taxation

HM Treasury written question – answered on 15th March 2016.

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Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Energy and Climate Change), Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

To ask Mr Chancellor of the Exchequer, what assessment the Government has made of the potential effect of future tobacco excise increases on the black market in tobacco products.

Photo of Damian Hinds Damian Hinds The Exchequer Secretary

The government believes that cigarette duty achieves a balance between its two fiscal goals on tobacco; to raise revenue and to protect public health.

In considering fiscal impacts of duties, the illicit trade is an important consideration. The government is committed to tackling illicit tobacco, which undermines health and tax policy objectives and harms legitimate business. HMRC and Border Force have an established and effective strategy for tackling tobacco fraud which has seen the illicit market reduce significantly since the strategy was first launched in 2000. This has meant that, since the introduction of the tobacco duty escalator, the size of the illicit market has continued to fall.

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