Untaxed tobacco buying hits record high, finds TMA survey

Selling untaxed tobacco

A major survey of the behaviours of over 12,000 adult smokers in the UK has found that over three-quarters are regularly avoiding taxes by buying tobacco from the black market, abroad or duty free.

The survey, commissioned by the Tobacco Manufacturers’ Association (TMA) and now in its fifth year, has revealed that numbers avoiding UK duty now stands at an all-time high. This supports HMRC analysis that untaxed and illegal tobacco remains a problem throughout the UK.

Moreover, the findings suggest that adult smokers are being pushed towards non-UK duty tobacco by high tobacco taxation, the introduction of plain packaging and the recent ban on minimum tobacco pack sizes.

Key findings:

  • 76% of adult smokers buy untaxed tobacco at least once a year – this can be from legal sources such as at duty free but also includes illegal sources such as from people in the pub or in street markets.
  • 16% of adult smokers spend more than £1,000 on untaxed tobacco every year.
  • 28% of smokers agree that plain packaging tempts them to buy untaxed tobacco.
  • 37% of smokers agree that minimum pack sizes tempt them to buy untaxed tobacco.
  • The average price for a pack of 20 illegal cigarettes is just £4.33 – almost half the typical legitimate UK price.
  • London (85%) has the highest prevalence on non-UK duty paid tobacco purchases with Wales having the lowest (70%).
  • 86% of adult smokers believe that tobacco prices are too high and 56% agree that rising tobacco prices tempt them to buy untaxed tobacco.
  • 64% of adult smokers would support the re-introduction of duty free tobacco shopping from the EU post-Brexit even if it was limited to 200 cigarettes or 250g roll your own tobacco.

The full findings can be found on the TMA website.

These findings reinforce the concern that the illicit tobacco trade continues to be a major problem. Valued at £2.5bn in 2016-17 by HRMC, the illicit tobacco trade reduces tobacco tax revenues, brings crime into communities, costs jobs and impacts legitimate businesses, particularly independent retailers.

The TMA recommends that, post-Brexit, the UK introduces fixed limits on personal tobacco imports to end the option for smokers to bring unlimited amounts of cheap tobacco back from the EU. This would reduce the opportunity for criminals to buy tobacco, claiming it is for personal use and then selling it on illegally.

Giles Roca, Director General of the TMA, said: “This survey shows the issue of untaxed tobacco is becoming an even greater problem across the UK with over three-quarters of smokers buying non-UK duty paid tobacco in the last year, the highest ever figures. Smokers cite price as the chief reason for avoiding duty and with tax making up 90% of the price, combined with two duty increases in 2017, we can see the direct impact that the Government’s taxation policy is having.

“This survey also shows that the introduction of plain packaging and the ban on small packs of tobacco in the last year are also contributing to making the problem of untaxed tobacco purchases worse and encouraging smokers to buy from illegal sources.

“The Government needs to undertake a full review of its approach towards tobacco as their policies are contributing to this illegal activity, which affects local communities, public finances and small business.”