Finance Act 2013

Section 181: Rates of Tobacco Products Duty

Summary

1. Section 181 provides for changes in the rates of excise duty on tobacco products (cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco) to have effect from 6 pm on 20 March 2013.

Details of the Section

2. Subsection (1) substitutes a new table of rates of duty into Schedule 1 to the Tobacco Products Duty Act 1979. The duty rates on tobacco products are changed as follows:

i.

cigarettes – the ad valorem element remains unchanged at 16.5 per cent; the specific duty is increased from £167.41 to £176.22 per 1000 cigarettes;

ii.

cigars – increased from £208.83 to £219.82 per kilogram;

iii.

hand-rolling tobacco – increased from £164.11 to £172.74 per kilogram; and

iv.

other smoking tobacco and chewing tobacco – increased from £91.81 to £96.64 per kilogram.

3. Subsection (2) provides for the new table of duty rates to have effect from 6 pm on 20 March 2013.

Background

4. Smoking kills half of all long-term users and is the biggest single cause of inequalities in death rates between the richest and poorest in the UK. The Government is committed to maintaining high tobacco duty rates to support health objectives and the public finances. Research has consistently shown that the price of tobacco products negatively affects demand.

5. Pre-announced increases of 2 per cent above inflation on all tobacco product duties will be maintained in 2014/15.

6. The duty increase, together with the consequential VAT, will on average increase the price of a packet of 20 cigarettes by 26p, a pack of 5 small cigars by 9p, a 25 gram pack of hand-rolling tobacco by 26p; and a 25 gram pack of pipe tobacco by 14p.