Gauloises Maker Calles Labour Cigarette Tax Plans Inappropriate

Published on December 15th, 2014 00:00

One of Britain's major cigarette companies has called Ed Miliband's strategies for a new tax on tobacco products as "unjust and really a bad idea".

Imperial Tobacco, whose cigarette brands include Gauloises, R1, Richmond and Golden Virginia, stated the policy would push customers "into the hands of scammers" providing non-qualitative products. Labour stated the suggested tax would increase 150 million a year for the National Health Service (NHS). The statement occurs at a time of increasing earnings for tobacco companies.

The BBC's business reporter, Jonty Bloom, stated Labour seemed to be suggesting a tax on tobacco companies' earnings according to market share in the UK. This, Labour revealed, would increase an extra 150 million per year and is based upon an identical scheme released in America in 2009.

Tobacco companies claim they already pay 12.3bn per year in tax, however a lot of that includes tobacco excise duty and VAT for the Treasury, not a tax on revenue. The three largest companies in the UK are Imperial Tobacco with 44% market share, Japan Tobacco International with 38% market share and British American Tobacco with 8%.
Tobacco earnings have also been boosting lately, with Imperial up 16.7% a year ago and British American Tobacco (BAT) higher by 14.5%, even though exports are currently a far greater market for BAT than sales in the UK.

Axel Gietz, leader of corporate affairs at Imperial Tobacco, explained to BBC: "Focusing on one individual industry that tends to be unpopular with an extra tax is completely inappropriate and unjust and really a bad idea. "If you take a look at the taxation level of tobacco products in this country we are at 86% of the price of a package of cigarettes in this country," he added. Mr. Gietz also cautioned that the recommended tax would "push customers in even bigger numbers into the arms of scammers who perform illicit trades with smoking products". Giles Roca, the leader of the Tobacco Manufacturers' Association, named the tax an "anti-business idea", and stated the Labour party "must be considering of how to get back the billions in profits the government loses via sales of illegal tobacco in the UK".