UK Needs to Hike Tobacco Tax

October 12, 2015 Taxation in UK

LONDON – Hiking taxes on tobacco in the UK will help twice as many people quit the habit, while at the same time raising more tax revenues for the government.

Late last week the UK’s All Party Parliamentary Group on Smoking and Health submitted a proposal to the Treasury’s Comprehensive Spending Review to more than double the rate of the annual tax hike levied on the sale of cigarettes and tobacco products.

Currently, the tax rate on tobacco is hiked by 2 percent above inflation each year.

However, the Parliamentary Group has called on the rate to be raised from 2 percent above inflation to 5 percent higher than inflation.

It is estimated that if the rate was raised to the newly proposed level then the annual collection of tax revenues from tobacco taxes could increase by GBP 100 million.

In addition to raising additional revenues, the raised rates of tax would also lead to double in the rate of decline in smoking in the UK.

Along with directly dissuading taxpayers from smoking but imposing higher prices, the government would also be able to use the newly collected funds to run additional smoking cessation campaigns.

Photo By: Marius Mellebye / 276ccm