HC Deb 26 November 1999 vol 339 cc254-5W
Mrs. Lawrence

To ask the Chancellor of the Exchequer what are his latest estimates of the revenue evaded and revenue lost to the Exchequer through(a) smuggling and (b) cross-border shopping of (i) alcohol and (ii) tobacco; and what steps he is taking to deal with this issue. [100568]

Dawn Primarolo

As stated in paragraph 5.99 of the pre-Budget Report, HM Customs and Excise assess the total amount of revenue (excise duty and VAT) evaded through all forms of tobacco smuggling in 1999 will be around £2.5 billion, based on work in progress.

Customs' new estimates for revenue evaded and revenue lost (excise duty and VAT) through cross-Channel smuggling in 1999 and cross-border shopping in 1998 are set out in the tables, together with a revised estimate for cross-Channel smuggling in 1998:

Table 2: Revenue lost through cross-border shopping
£million
Product type 1996 1997 1998
Beer 45 50 55
Wine 100 140 180
Spirits 45 50 50
Tobacco Products 50 60 85
Total 235 305 375

Notes:

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

2. The figures shown for revenue lost use Customs' assumption that between 70 per cent. and 80 per cent. of all alcohol purchased abroad substitutes for similar purchases in the UK (100 per cent. assumed for tobacco products).

3. The figures exclude any amounts for revenue lost on alcoholic drink and tobacco products smuggled in freight consignments. Customs have not published any estimates for the extent of these activities for alcohol but the assessment includes freight smuggling.

In addition, Customs and Excise estimate that about £50 million per year is lost through smuggling of cigarettes from non-European Union countries by air passengers.

The pre-Budget Report sets out the further steps the Government are taking to ensure that tobacco smuggling does not pay. Having taken advice from Martin Taylor, the Government will introduce a range of measures designed to tackle the evasion of tax on tobacco. These include: a national network of x-ray equipment; pack marks to show UK duty has been paid and ensure more effective prosecution of smugglers; and other measures including increased asset confiscation and a new licensing framework.