§ Sir William Clarkasked the Chancellor of the Exchequer by how much the duty on tobacco would have to be increased to take account of inflation since April 1975; what this increase would amount to on a packet of 20 cigarettes; and what is his estimate of the extra revenue to the Exchequer during the year 1981–82.
§ Mr. Peter ReesIn 1975 the tobacco duty was charged on the weight of raw leaf used in manufacture. Since the completion of the conversion to tobacco products duty on 1 January 1978, hand-rolling tobacco, cigars, and pipe tobacco have been dutied by reference to the weight of the finished products whilst the duty on cigarettes has comprised a specific element related to their number and an ad valorem element charged on their recommended selling price. It is therefore not possible to make a direct comparison between current duty rates and those of 1975.
However, to obtain the same real value as in April 1975 for the duty burden on 20 standard tipped cigarettes would require a price increase of about 15p—including VAT. If the duties on other tobacco products were also to be raised by the same proportion it is estimated that the additional revenue in a full year would be of the order of £500 million.