A prominent Member of Parliament within the Conservative party has advocated for a reduction in tobacco taxes, arguing that current high duties are driving a significant black market in cigarettes. Jack Rankin, the Parliamentary Private Secretary to the Conservative leader and MP for Windsor, stated that while a tax cut is not an immediate priority, there is a compelling economic case for it.
Rankin highlighted at a conference fringe event that between one-third and one-half of all cigarettes sold are illicit. He pointed out the stark price difference between legal and illegal cigarettes, with illicit packs costing around £3.50 compared to approximately £20 for a legal pack. This disparity, he argued, creates an obvious incentive for illicit markets to flourish.
He estimated that the Treasury is losing between £1.7 billion and £4.7 billion annually due to this illicit trade. Citing a "Laffer-type argument," Rankin suggested that certain taxes, including those on tobacco, may have surpassed the point at which they maximize revenue. He also criticized many "sin taxes" as illiberal and ineffective, attributing their implementation to civil servants with an overly rigid belief in imposing clean lifestyles on the public.
His remarks come against the backdrop of past government policies aimed at curbing smoking. Former Prime Minister Rishi Sunak had proposed a ban on tobacco sales for individuals born after January 1, 2009. Although this initiative stalled due to the 2024 General Election, a similar measure was subsequently enacted by the Labour government and is set to take effect next year.
