HC Deb 22 December 1983 vol 51 cc556-7
12. Mr. Hayes

asked the Chancellor of the Exchequer if he will revise his estimates of revenue from the specific duties on tobacco and alcohol in view of current health education campaigns.

Mr. Ian Stewart

The effects of health education campaigns on the trends of consumption are among the factors that have been taken into account in the estimates.

Mr. Hayes

I am grateful to my hon. Friend for that answer. Will he take this opportunity to repudiate the mischievous suggestions by the London stockbrokers., Buckmaster and Moore—no relation—who suggest that the revenue that will be available from tobacco and alcohol was underestimated in the Autumn Statement?

Mr. Stewart

I have seen the comments to which my hon. Friend refers. The criticism of our estimates, suggesting that they are too low, does not seem to have allowed for any fall in demand for cigarettes or beer as a result of an increase in tax. The Exchequer would, of course, lose all the tax caused by any loss of volume and not just the incremental amount. We also allow for a switch by consumers into or out of items whose price has been changed. That, of course, alters the expected tax revenue from all other goods.

Mr. Dubs

Is it not true that during past years tobacco and alcohol have been getting cheaper in real terms? In setting the duties on those products, to what extent does the hon. Gentleman take the health hazards into account?

Mr. Stewart

During the past four years the duty on cigarettes and beer has risen respectively by 25 per cent. and 31 per cent. Obviously, the health factors are among those taken into account when we consider these matters. I draw the attentiion of the hon. Gentleman to a document produced by the Department of Health and Social Security entitled "Drinking Sensibly", which produces several arguments suggesting that tax should not be used systematically as a regulator. On the other hand, with the Christmas season approaching, I hope that the other messages about drinking sensibly will be taken seriously and that people will be conscious of the dangers of drinking and driving in the coming days.

Mr. Heathcoat-Amory

Will our right hon. Friend bear in mind our economic health as well as our personal health in assessing the excise duty on alcohol? Will he resist demands from Europe to raise the tax on beer and cider in line with the tax on wine? British jobs and tastes, and my constituents, demand that beer and, especially, cider are not penalised.

Mr. Stewart

I take my hon. Friend's point about the duties on beer and cider and the importance of those interests in this country. Speaking generally, we must have regard to the impact of such taxes on revenue. We know that sometimes increased duty can lead to diminishing returns.