UK anti-smuggling plan raises industry fears (fwd)

[Robert Weissman <rob@essential.org>]

UK anti-smuggling plan raises industry fears
by John Willman/Consumer Industries Editor  
Source: Financial Times, Thursday, 11/11/99

      TOBACCO: UK anti-smuggling plan raises industry fears
      
By John Willman, Consumer Industries Editor
     

Government measures to crack down on tobacco smuggling, announced by the
chancellor on Tuesday, will restrict the space on packs for branding to
make room for duty marks showing UK tax has been paid.

Retailers which sell cigarettes without the duty mark will face tougher
penalties while pub landlords could have their licences suspended.

Manufacturers and retailers said they welcomed any measures that would
reduce illegal imports which now account for one in five cigarettes smoked
in the UK.

But they said they wanted further details of the measures, proposed after
a review of smuggling carried out for the chancellor by Martin Taylor,
chairman of W.H. Smith.

The Treasury has become increasingly concerned at the loss of revenue
through smuggling which it estimates now costs the Exchequer £2.5bn a
year.

Manufacturers had concerns over the further encroachment on pack design,
with a quarter of the space devoted to the standard health warning.

Both manufacturers and retailers said they believed the real cause of the
sharp rise in smuggling in recent years was the policy of automatic annual
increases in duty rates of 5 per cent above the rate of inflation.

"It is not enough to be tough on the symptoms of tobacco trafficking,"
said the British Retail Consortium. "The government needs to be tough on
the causes of tobacco trafficking."

The Tobacco Alliance, representing 26,000 small retailers, said the
government should end the automatic real increases in tobacco duty. "It
needs to stop the tobacco escalator, just as it has the fuel escalator,"
said Paul Mason, a Southampton tobacconist.

Customs & Excise has broken up a £45m cigarette smuggling operation.
Eleven people were arrested on Monday after raids in England and Northern
Ireland led to the seizure of 3.5m cigarettes.