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Written Question
Taxation: Tobacco
Monday 12th May 2025

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask His Majesty's Government what action they are taking to combat the pricing strategies of (1) under-shifting, and (2) over-shifting, by the tobacco industry to protect the public health aims of tobacco taxation.

Answered by Lord Livermore - Financial Secretary (HM Treasury)

Like most businesses across the economy, tobacco producers and retailers are free to set prices for their products. Evidence suggests that close to 100% of tax increases, and in many cases more, is passed through to consumers through prices. How this is distributed across products is a matter for the individual firms.

The UK has some of the highest tobacco taxes in the world which have helped reduce smoking prevalence to 11.9%.

In order to protect the public health objectives of tobacco taxation the Minimum Excise Tax sets a minimum amount of duty collected on a pack of cigarettes. This discourages manufacturers from selling cheap cigarettes as it reduces the profitability of cigarettes sold at or below the trigger price of £13.59 for a pack of 20 cigarettes.


Written Question
Smoking
Monday 12th May 2025

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of the impact of the pricing strategies of (1) under-shifting, and (2) over-shifting, by the tobacco industry on smoking prevalence.

Answered by Lord Livermore - Financial Secretary (HM Treasury)

Like most businesses across the economy, tobacco producers and retailers are free to set prices for their products. Evidence suggests that close to 100% of tax increases, and in many cases more, is passed through to consumers through prices. How this is distributed across products is a matter for the individual firms.

The UK has some of the highest tobacco taxes in the world which have helped reduce smoking prevalence to 11.9%.

In order to protect the public health objectives of tobacco taxation the Minimum Excise Tax sets a minimum amount of duty collected on a pack of cigarettes. This discourages manufacturers from selling cheap cigarettes as it reduces the profitability of cigarettes sold at or below the trigger price of £13.59 for a pack of 20 cigarettes.


Written Question
State Retirement Pensions: British Nationals Abroad
Wednesday 29th June 2016

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask Her Majesty’s Government what progress HM Revenue and Customs has made in investigating in the UK tobacco companies that over-supply low tobacco-tax foreign countries, and what action has resulted from those investigations.

Answered by Lord O'Neill of Gatley

The UK introduced stringent rules in 2006 requiring all UK Tobacco Manufacturers (TMs) to control their supply chains. These rules required them to take steps to avoid supplying cigarettes and/or HRT (hand rolling tobacco) to persons who are likely to smuggle them into the UK or resupply them to other persons who are likely to do the same.

Tobacco manufacturers can face penalties of up to £5m for failing to comply with the rules. HMRC action, in monitoring TM’s compliance, is reflected in a reduction in supplies of UK brand cigarettes to high risk markets of 20% since 2010. At the same time, supplies to those markets of UK brand Hand Rolling Tobacco (HRT) has reduced by 36%.

Despite this success HMRC is not complacent. They continue to closely monitor the illicit market in the UK, which today is made up of a mix of unregulated brands, non UK brands, and counterfeit as well as genuine UK brands, to ensure the legislation is working. HMRC also robustly challenge TM’s supply chain policies and procedures to ensure their continued compliance with the rules.

HMRC cannot comment on the progress of individual investigations but it is a matter of public record that one manufacturer has been subject to a supply chain penalty. This penalty is currently under to appeal.


Written Question
Ectopic Pregnancy
Wednesday 29th June 2016

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask Her Majesty’s Government, further to the answer by Lord Ashton of Hyde on 14 June (HL Deb, col 1099), what action they are taking in response to the practice by some companies of supplying low-tax foreign markets with more tobacco than they are capable of consuming, thereby facilitating their products being brought back to the UK and depriving HM Revenue and Customs of revenue.

Answered by Lord O'Neill of Gatley

The UK introduced stringent rules in 2006 requiring all UK Tobacco Manufacturers (TMs) to control their supply chains. These rules required them to take steps to avoid supplying cigarettes and/or HRT (hand rolling tobacco) to persons who are likely to smuggle them into the UK or resupply them to other persons who are likely to do the same.

Tobacco manufacturers can face penalties of up to £5m for failing to comply with the rules. HMRC action, in monitoring TM’s compliance, is reflected in a reduction in supplies of UK brand cigarettes to high risk markets of 20% since 2010. At the same time, supplies to those markets of UK brand Hand Rolling Tobacco (HRT) has reduced by 36%.

Despite this success HMRC is not complacent. They continue to closely monitor the illicit market in the UK, which today is made up of a mix of unregulated brands, non UK brands, and counterfeit as well as genuine UK brands, to ensure the legislation is working. HMRC also robustly challenge TM’s supply chain policies and procedures to ensure their continued compliance with the rules.

HMRC cannot comment on the progress of individual investigations but it is a matter of public record that one manufacturer has been subject to a supply chain penalty. This penalty is currently under to appeal.


Written Question
Voting Rights: British Nationals Abroad
Wednesday 29th June 2016

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask Her Majesty’s Government what steps they plan to take to further reduce the capacity for tobacco wholesalers and retailers to supply illicit tobacco.

Answered by Lord O'Neill of Gatley

The Government currently has no plans to introduce new measures specifically applicable to wholesalers and retailers to tackle the supply of illicit tobacco. However, HM Revenue and Customs has undertaken a public consultation on the implementation of Article 6 of the WHO Framework Convention on Tobacco Control Illicit Trade Protocol, part of which is concerned with consideration of the licensing of the supply chain for tobacco products. The consultation sought views from a wide range of stakeholders to help assess the potential benefits and impacts of introducing a scheme to help establish a clear evidence base for any decisions. The results of the consultation and the proposed next steps will be announced in due course.


Written Question
Brexit
Wednesday 29th June 2016

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask Her Majesty’s Government when they expect to ratify the WHO protocol on the illicit trade in tobacco.

Answered by Lord O'Neill of Gatley

The Government is fully committed to implementation and ratification of the WHO Framework Convention on Tobacco Control Illicit Trade Protocol. The majority of the requirements of the Protocol are already in place in the UK. HM Revenue and Customs has recently consulted on the implementation of Article 6 of the Protocol, which includes the requirement to license tobacco manufacturing machinery. The Government will ratify the Protocol once we are satisfied that the legislation is in place to meet this requirement.


Written Question
Ectopic Pregnancy
Wednesday 29th June 2016

Asked by: Lord Rennard (Liberal Democrat - Life peer)

Question to the HM Treasury:

To ask Her Majesty’s Government what is their current estimate of the loss of tax revenue each year owing to tobacco smuggling.

Answered by Lord O'Neill of Gatley

The 2014/15 tax revenue loss associated with illicit tobacco, including both cigarettes and hand rolling tobacco, is estimated to be £2.1 billion.

Estimates of UK tax revenue losses are published every year. The latest estimates, for the years 2006/7 to 2014/15, are published in ‘Tobacco Tax Gap estimates 2014-15’.