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.

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.