ENGLAND:
UNDERAGE SMOKING SET TO INCREASE AFTER BUDGET

This price increase is well above the rate of inflation.

He also added 9p to the price of a pack of small cigars and 12p to a 25g pack of pipe tobacco. There was no increase for hand-rolling tobacco. Implementation of the rise in tobacco duty will be delayed until 1st December 1998. It is estimated that this delay may end up costing the Exchequer more than £600 million in lost revenue as people stockpile.

The effect of widening still further the differential between the price at which tobacco products are sold in this country and the price at which they are bought in continental Europe is to increase the attractiveness to smugglers of bringing goods back without paying UK duty.

The Government's own figures reveal the extent of tobacco smuggling over recent years. For 1996 - the first year for which figures were compiled - it was estimated that tobacco smuggling losses were £560m.

For 1997 the loss was put at £690m, and 96's figure was revised to £640m (ref: HM Customs & Excise news release, 26th September 1997). What they don't illustrate is that smuggling was negligible until European border restrictions were removed in 1993.

Now it is estimated that smuggled goods account for 5% of the total market and that about one million smokers buy their tobacco illegally. Customs' officials admit that "two in every three packets of hand-rolling tobacco came in illegally."

In addition, legitimate cross-border shopping - which is the perfectly legal buying of goods in any part of the European Union and bringing them home for private consumption - has been increasing. This is estimated to have cost the government about £1 billion in 1997.

To tackle the smuggling problem the government announced an increase in the number of Customs officers. Treasury Financial Secretary Dawn Primarolo told the House of Commons that there would be "no let up" in the battle to crackdown on smugglers. She pledged: "We will be taking action to make life even more uncomfortable for those who flout the law and defraud the honest taxpayer."

Her proposals brought a rebuke from the Daily Star. In an editorial of 20th March, it suggested a better way to resolve the smuggling situation: "Instead of wasting even more money on irritating Customs searches, let's CUT the taxes on drink and fags.

Countries in the European Union are supposed to be aiming to bring all duties into line. It's not France's fault that their rates are a lot less than ours. Just the opposite in fact. We should be cutting, but instead we're putting more and more on, so no wonder the bootleggers are doing a roaring trade."

Dave West, owner of tobacco selling warehouses on the Continent, commented: "We're delighted with the Budget. Gordon Brown must be crazy. Since cigarettes were put up in the last Budget sales escalated by up to 700 percent and it's only going to get better for us." Adding: "All our customers are Britons who think cigarettes are too expensive over there. We're going to be stocking up." (ref: London Evening Standard, 18th March 1998.)

The effect of smuggling on the legitimate trade is well documented. A study by the Tobacco Alliance, an organisations of independent retailers, claims that retailers lose on average £37,000 per year. The 1997 Pieda Report suggests that over 3,500 jobs are threatened by 'cross-border' trade.

It is also worth reminding ourselves of the boost smuggling gives to organised crime and that alcohol prohibition in the USA gave the greatest ever boost to the Mafia. According to Santiago Lopez Valdivieso, Civil Guard director-general in the Pyrenean state of Andorra: "The contraband is controlled by mafias and is of industrial proportions." (ref: The European, 23rd march 1998.) So large is the smuggling problem in Andorra (population 63,000) that every man, woman and child would have to smoke three packets a day to consume the amount sold.

More worrying is that these smuggled goods may find their way in the hands of children. These are the very group who can't be legally sold tobacco products and therefore represent a potential market for the smuggler. Concern about the impact of smuggled goods on the prevalence of underage smoking has been expressed by Dr John Marek, the Labour MP for Wrexham. Interviewed by the Sunday Mirror (8th March 1998) Dr Marek said: "When you can get cigarettes and hand-rolling tobacco at half-price in just about every pub in Britain it is no wonder youngsters are taking it up. The problem is like an iceberg, plain for all to see. But, the Government is pretending it isn't there."