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Finance Act 2014

Background Note

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.This section increases the excise duty on all tobacco products by 2 per cent above the rate of inflation (Retail Price Index). The Government will continue to raise all tobacco duties rates by 2 per cent above inflation each year between 2015-16 and 2019-20 inclusive.

6.The duty increase, together with consequential VAT, will on average increase the price of a packet of 20 cigarettes by 24p, a pack of 5 small cigars by 8p, a 25 gram pack of hand-rolling tobacco by 23p; and a 25 gram pack of pipe tobacco by 13p.

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