Cigarettes (Hansard, 3 May 1978)

§ Mr. Skeet
asked the Chancellor of the Exchequer whether the supplementary health tax on higher-tar yielding cigarettes is made after allowance for ad valorem tax at 30 per cent. of the retail price and value added tax.

§ Mr. Robert Sheldon
The supplementary tax takes the form of an increase in specific duty equivalent to 41p on a packet of 20 cigarettes. If this increase is passed on in prices there will be a consequential increase in the charge of ad valorem duty and value added tax, making a total increase of about 7p a packet.

§ Mr. Skeet
asked the Chancellor of the Exchequer why it was thought appropriate to divide the 17 mg to 22 mg tar bracket of cigarettes for tax purposes into two sub-groups, namely, below and over 20 mg, rather than implement the tax on the two tar groups above 22–5 mg.

§ Mr. Robert Sheldon
It was decided to fix the level for the supplementary duty on cigarettes with higher tar yields at 20 mg in order to make the maximum impact permitted by the EEC Fifth Directive on tobacco taxation.

§ Mr. Skeet
asked the Chancellor of the Exchequer whether he had consultations with the industry to ensure that the levy of the supplementary health tax on 186W cigarettes is equitable in the way it was levied, practical in implementation and consistent with the voluntary agreements negotiated between the Secretary of State for Social Services and manufacturers in February 1977.

§ Mr. Robert Sheldon
Yes. I have considered carefully the arguments put forward by the industry, and I am satisfied that the supplementary duty is fair and practicable and does not conflict with any agreement between Government and the industry.

§ Mr. Skeet
asked the Chancellor of the Exchequer whether the effect of the supplementary health tax on higher-tar yielding cigarettes will be to penalise the older less well-paid smokers much more than younger people.

§ Mr. Robert Sheldon
There is some evidence that a larger proportion of those over 65 than of younger people smoke cigarettes with higher tar yields. However, as my right hon. Friend made clear in his Budget Statement, the purpose of the supplementary duty is not to penalise such smokers but to encourage them to smoke less dangerous cigarettes.