HC Deb 09 February 1993 vol 218 cc537-8W
Mr. John Marshall

To ask the Chancellor of the Exchequer what conclusion the October 1992 ECOFIN meeting reached on the cigarette duty structure; and how this is reflected in the Council and Commission minute statement on the target rates set out in the amended proposal for a Council directive (9776/89 fisc 167).

Sir John Cope

ECOFIN agreed that from 1 January 1993 the minimum excise duty incidence on cigarettes would be 57 per cent. of the retail selling price, inclusive of all taxes, of the price category most in demand. This agreement is reflected in the Council's adoption of directive 92/79/EEC.

The Commission's original proposal for cigarette taxation had envisaged a target rate towards which member states' rates would converge over time. In Council discussion of the proposal, it was agreed that the target rates would be retained for reference purposes only. In the joint statement for the Council minutes it was agreed that member states would take account of them each time they amend national rates of duty, but there is no obligation to move towards them.

Mr. John Marshall

To ask the Chancellor of the Exchequer what steps he proposes to take to follow up the concerns expressed in the minutes of the October 1992 ECOFIN meeting that the agreed formula for cigarette tax harmonisation would perpetuate the wide tax differentials in the EC.

Sir John Cope

In the run-up to the first review of the structure and minimum rates of tobacco duties, which is due not later than 31 December 1994, we shall monitor any evidence of distortions of trade within the EC and will fully consult the tobacco industry. We have made it clear that we would prefer an EC cigarette duty structure incorporating a minimum cash duty and a greater reliance on the specific duty share.

We are also taking every opportunity to encourage low-tax member states to increase their tobacco taxes on health grounds. For example, during the United Kingdom presidency of the Community we held a seminar in London for health and tax officials which produced useful conclusions on the support that tax can give to health policy.