HC Deb 18 May 1999 vol 331 cc338-9W
Mr. Whittingdale

To ask the Chancellor of the Exchequer what is the latest estimate of the proportion of the market in cigarettes taken by(a) legal personal imports and (b) illegal imports. [76566]

Dawn Primarolo

HM Customs and Excise estimate the proportion of the UK tobacco market taken by legitimate cross-border shopping (excluding duty free purchases) to be about½ per cent. in 1997. This is based on Customs' analysis of data from the International Passenger Survey conducted by the Office for National Statistics, for which the latest year available is 1997. Separate estimates for cross-border shopping of individual tobacco products are not published.

HM Customs and Excise also estimate the proportion of the UK cigarette market taken by cross-Channel smuggling and smuggling by air passengers to be about 3 per cent. This is based on Customs' own surveys of international passengers carried out in 1998.

Additionally, HM Customs and Excise are working, with representatives of the tobacco industry, to establish robust ways of measuring the overall scale of tobacco duty evasion. Work is still in progress on this, but Customs' latest assessment, based on the results to date, leads us to believe that the proportion of the UK cigarette

Table 1: Revenue lost through cross-border shopping and cross-Channel smuggling
£ million
Cross-border shopping 1997 Cross-Channel smuggling 1998
Product type Duty VAT Total Duty VAT Total
Beer 35 20 50 90 50 140
Wine 95 45 140 35 15 50
Spirits 40 15 50 20 5 30
Hand-rolling tobacco 1 1 1 575 150 730
Cigarettes & Other tobacco products 50 10 60 220 50 270
Total 215 85 305 945 275 1,220
1Separate estimates for cross-border shopping of individual tobacco products are not published. The total for all tobacco products is shown under 'cigarettes and other tobacco products'.

Notes:

1. Estimates of legitimate cross-border shopping are based on data from the International Passenger Survey conducted by the Office for National Statistics, for which the latest year available is 1997.

2. Estimates of cross-Channel smuggling are based on Customs own survey of returning sea and Tunnel passengers, most recently carried out in June 1998.

3. Figures have been independently rounded to £5 million. Components may not therefore sum to the totals shown.

4. Figures use Customs' assumptions that 70–80 per cent. of alcohol purchased abroad substitutes for similar purchases in the UK.

The estimates exclude any amounts for revenue lost on alcoholic drinks and tobacco products smuggled in freight consignments. Customs have not published any estimates for the extent of these activities for alcoholic drinks. Customs' assessment of the scale of all forms of tobacco smuggling, based on work still in progress to measure such smuggling, is given in reply to a written parliamentary question from my hon. Friend the Member for Preslie Pembroke (Jackie Lawrence) today.

Further details of the cross-border shopping and cross-Channel smuggling estimates are given in a technical report placed in the House of Commons library on 19 November 1998.