A warning over the rise in black market tobacco has been issued by think-tank, the Institute of Economic Affairs.
Citing HMRC figures which revealed that the number of duty-paid cigarettes sold fell from 23.6 billion in 2021 to 13.2 billion in 2024, a decline of 44.4%, and that, in the same period, sales of duty-paid hand rolling tobacco (HRT) have dropped from 8.6 million kilograms to 4.5 million kilograms, a decline of 47.6%.
According to Dr Christopher Snowdon, this coupled with the fact that when population growth is taken into account, the number of smokers declined by just 0.5 percentage points between 2021 and 2024, a relative decline of 5%, points to a rise in illicit tobacco sales.
“We can use data from the Smoking Toolkit Study which surveys 1,700-1,800 adults every month to produce estimates of smoking in England, Scotland and Wales,” explained Snowdon. “In England, the average smoking prevalence estimate in 2021 was 14.7%, falling to 14.2% in 2024. Extrapolated across the UK, this implies a small decline in the number of smokers, from 8.31 million in 2021 to 8.27 million in 2024, once population growth is accounted for.
“The only plausible explanation for the collapse in legal tobacco sales is that there has been rapid growth in tobacco sales on the black market. There were four significant increases in tobacco duty between October 2021 and October 2024, with the minimum excise tax on cigarettes rising by 39% and duty on HRT rising by 76%. These tax hikes have not led to increased revenue. On the contrary, cigarette duty revenue has fallen by 20% and HRT duty revenue has fallen by 19% (as shown in the two graphs below). Overall, tobacco duty revenue fell from £10.4 billion in 2021 to £8.4 billion in 2024.”
Laughable
“These figures should act as a wake up call to the government. Official estimates of the tobacco tax gap lack all credibility. The most recent estimate from HMRC suggests that only 6.9% of cigarette sales were non-duty paid in 2022/23, the lowest figure on record, but HMRC has not had sufficient data to make a plausible estimate since 2019/20 and the government refuses to carry out empty pack surveys.
“Anyone familiar with the tobacco market in Britain today will find HMRC’s estimates laughable, but they have been used as a comfort blanket by politicians and campaigners while the Tobacco & Vapes Bill goes through Parliament.”
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