ASH Scotland Policy & Communications Officer, Ruaraidh Dobson, writes about illicit tobacco figures and the tobacco industry.
The tobacco industry has a long history of twisting the truth, and one of their favourite areas for misrepresentation is illicit tobacco – that is, tobacco purchased without paying tax. We’ve noticed a little uptick in these stories recently, despite the fact that the latest HMRC figures (from October) show illicit tobacco down.
Make no mistake, illicit tobacco is a genuine problem. Tobacco taxes exist for good reason, helping to recoup the public costs imposed by smoking while prompting quitting (and thereby saving lives). Anything that undermines these laws should be opposed strenuously and effectively, by working with the UK and Scottish Governments to enforce the law properly – the strategy which has seen substantial falls in the illicit market since the turn of the century.
But tobacco companies have repeatedly exaggerated the scale of illicit tobacco. In the past, they’ve used the issue to promote their own agenda – a low-tax, high-tar nation – and oppose health measures such as tobacco tax, display bans and plain packaging on the spurious grounds that they’ll drive smokers to buy from criminals instead.
The true scale of the illicit trade in tobacco
Rates of illicit tobacco in the UK have been declining since the start of the century, according to the official tax gap figures from HMRC. This is despite industry claims that significant public health measures, such as tax rises, will fuel the illicit market. Tobacco taxes have increased over this period of time, but with improved enforcement measures, the size of the illicit market has decreased markedly (as shown in the graph).
Figure 1 – Size of the illicit markets in cigarettes and HRT, expressed as cigarettes or cigarette-equivalents (data from HMRC), vs the price of a standard pack of cigarettes including tax (data from the Tobacco Manufacturers Association) 2000 – 2016.
How Big Tobacco uses the illicit trade to its own ends
The spectre of the illicit trade is used to oppose public health measures such as standardised packaging and duty increases. Advertisements are taken out by tobacco companies promoting the possibility of an increase in criminal activity. Neither HMRC nor the Trading Standards community supported the tobacco industry’s claims that the illicit trade will increase as a result of plain packaging.
As a University of Bath study put it, the industry has acted by ‘exaggerating the threat of illicit tobacco by commissioning surveys whose methodology and validity remain uncertain, planting misleading stories and misquoting government data’. Any information about illicit tobacco provided by the industry should always be treated with caution and scepticism.
To find out more, you can see ASH Scotland’s 2016 short report “Dodgy Cigs”, which details the tobacco industry’s close history with the illicit trade.