The British Chancellor Jeremy Hunt is expected to rise cigarette prices according to the latest inflation rates of the economic and the cost of life crises in the 2023 budget which will be announced next month. This might see the cost of a packet of twenty filtre cigarettes rising by an average of £1.15p, and the cost of roll-your-own tobacco sachettes rising by an average of £2. This could be the biggest yet price increase of tobacco to date in the country.
When influencing prices for cigarettes in accordance to excise duty and value added tax, the UK Chancellor has to take into consideration inflation and apply an increase of 2% over the current inflation rate, according to what has been decided before to date, or he can freeze the tax rate like Rishi Sunak did in the 2021 budget when he was Boris Johnson’s chancellor. The last time cigarette prices went up was with the 2022 budget when Rishi Sunak applied an average increase of 88p for each packet.
The Retail Price Index (RPI) is currently 12.7% and Jeremy Hunt is expected to add 2% to the RPI increasing the price of tobacco by almost 15%, which when applied to the minimum cost of £10 gives an £1.15p increase. Tobacco excise duty and cigarette taxes annually earns the government an income of over £10 billion in taxes.
The prospect has been met with critical response with even the Action on Smoking and Health (A.S.H.) group urging the Chancellor to increase the duty by 5.4% in line with earnings rather than sky-high inflation. Benjamin Elks, operation manager of the TaxPayers’ Alliance said that “Smokers already pay vast sums to the Treasury. Tobacco taxes are high enough, without yet another damaging increase. The government should freeze tobacco duty.”
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