| Previous Section | Index | Home Page |
Mr. O'Brien: I am grateful to my hon. Friend, who puts the balance of the argument. Some smuggled goods clearly do come from France. I have seen various figures, although I am reluctant to place enormous reliance on them all. The nature of the activities involved makes it difficult for us to be sure about such figures.
One option that is open to the Government is to alter, in the Finance Bill, the rates on these tobacco products. It is therefore right for us to take a cool, calm look at whether the House is doing the right thing in terms of influencing matters—smuggling, cross-border shopping, and health issues—about which we are so rightly worried.
Lawrie Quinn (Scarborough and Whitby): The hon. Gentleman is developing an argument about an experiment. Has he assessed what such an experiment would cost the Exchequer?
Mr. O'Brien: I have looked at that. I have not had the Treasury model to play with, but I have been fairly persuaded by the evidence that I have seen. I am sure that the hon. Gentleman would want me to refrain from going through the body of that evidence—much of it is flagged among my notes—but I am convinced that concerns on these matters are shared by all hon. Members. They may approach the matter from a variety of angles, but there is a broad health concern. If the Government had the vision and courage to go down the sort of route proposed by the amendment, I think that there could be a net gain for the Revenue.
So much hand-rolling tobacco that is non-UK duty paid now comes into the country that reducing the price differential would have a beneficial effect. I do not propose that the Government should be braver, and
reduce the differential still further. That would not necessarily be a responsible action, but the amendment offers us the opportunity to find out whether the approach would have some effect.It is possible that those with whom what I propose might not necessarily find favour will say that it would increase UK tobacco consumption. I suspect that overall tobacco consumption is, in fact, set by other factors. It has to do with the price at which one acquires tobacco, but also the ease with which one acquires it and the incentive of a massive differential. There is becoming almost a culture of cross-border shopping, and there is something quite attractive to young people in acquiring cigarettes and tobacco products in marketplaces in which they are non-UK duty paid. There has been some interesting talk in the pub from time to time about that.
2 pm
Lawrie Quinn: Following the line of my argument, I am sure that the hon. Gentleman would not want to leave the House in the dark on why he feels there might be a net gain. Approximately how much gain does he think the Revenue and the Exchequer would receive from his experiment?
Mr. O'Brien: I am tempted to try to satisfy the hon. Gentleman's request, but I do not think that that would be responsible since I would be taking a stab at it. The effect is more likely to be neutral than to be a small net gain, but one need only examine the data to see where the graph lines cross. I cannot be sure; there might be a small net loss. What we should really focus on is the influence that the rates will have on those behaviours that we think are in the best interests of our constituents, as as regards access to products that some people believe have health considerations attached to them.
There might be some challenge to Treasury receipts; I cannot be 100 per cent. sure about that. The bigger issue is the direction in which we are going. Is it right automatically to assume that there should be an escalator each and every year, or should we reflect on underlying factors such as the massive rise in smuggling? We know that the Government are concerned about that. They have brought forward measures—somewhat late in the day in our view—to try to address it. They know about cross-border shopping, and it seems that nothing will persuade them to see that as something that they would necessarily want to stop.
It is important to the corner shops in all our constituencies to bear all these points in mind. I dare say that I am not the only Member of Parliament who has had representations from constituents who are doing their best to run those fine-margin businesses as a community service. They are not alone: community post offices and community pharmacies are also under threat, and we should do our best to help our constituents to retain those services.
I think it wrong to argue that increased UK tobacco consumption or reduced Treasury receipts would result from the amendments. We must accept that tobacco consumption has not changed since roughly 1992, in spite of a 27 per cent. real terms increase in cigarette tax. Smuggling has reduced the average price of cigarettes sold in the UK, and what has changed is from where and how tobacco products are bought, and at what price.
The impact on Treasury receipts is likely to be broadly neutral, in fact, as more consumption will be captured in the tax net, though that does not necessarily imply more consumption. Catching consumption in the tax net is what rightly concerns the Minister and the Government. That would also give us data containing the right information for health planning.To help us test the Government's primary arguments, publication in full of the Taylor report, which I request once more although I know that that the Government have consistently denied us publication, would have been helpful, even if all the arguments have been made in this place and the other place. The Government have always claimed that the report contains operational and sensitive information, but it is appropriate to ask for publication for no other reason than that it is apparently one of the best studies available, on which the Government have, presumably, relied, and which contains data that would allow us not to make experiments in the dark. The hon. Member for Scarborough and Whitby (Lawrie Quinn) said that we should not take a step in the dark, and the Taylor report would help shed some light on the subject. Once again, therefore, I formally request publication on the basis that the debate is ill served by continued Government secrecy.
I propose a freeze on duty to encourage UK smokers to revert to UK duty paid products and maintain UK revenue, while not, I believe, increasing total consumption, which is what matters. UK duty paid product is sold at a price to deliver Government health objectives for adults and children. The reason I single out non-cigarette tobacco products for a freeze is that the House could, by accepting the amendments, establish evidence of the differential in consumption and revenue raising between cigarettes and other tobacco products. Placing them on a comparable basis would provide a control group test.
While there has been legitimate concern about whether that would be a stab in the dark, I think that it would provide a glimmer of understanding about how the House can genuinely influence our constituents for the better by what we do. During the period of the present Government, there has been an enormous expansion in smuggling and the new phenomenon of cross-border shopping, which seems to be set fair, without let. Consumption has flat lined; we are not reducing consumption among the adult population, and it is increasing among children and, particularly, young women.
What I propose would be appropriate, and I hope that the House will give the amendment a fair wind.
Jon Trickett (Hemsworth): Thank you for calling me, Sir Alan, and welcome to the Chair. When I last sat on a Finance Bill Committee, Labour was in opposition. I do not doubt that you, in your wisdom, will keep me well in order.
I listened carefully to the lengthy exposition of the hon. Member for Eddisbury (Mr. O'Brien), but I was not convinced by it. His logic appeared to favour tax harmonisation across the European Union: wherever there was a cross-border differential in prices as a result of taxation, the country charging the higher rate of taxation should reduce it to the lower rate on the other
side of the customs border. That implies tax harmonisation across Europe, so I was surprised to hear Conservatives, who usually pose as the Eurosceptic party, argue for a self-denying ordinance in the Treasury that would require a reduction in taxation wherever such a differential arose. I would not want that, and I am not sure that many of my colleagues would, but it was interesting to hear that case made.A contrary argument might have been made—that taxation on the continent should correlate more closely to ours, but the Tories always want to cut taxes, no matter what the implications are, and the tax harmonisation that they want would take us to the lower end of the spectrum.
We should remind ourselves of why we tax tobacco products. Some 120,000 deaths a year are directly caused by tobacco consumption of one kind or another. There is no real evidence that cigarette smoking is substantially more lethal than other forms of tobacco consumption. The Treasury has increased taxation on tobacco products, under both main parties, not just to safeguard revenue, but to try to bring about a change in behaviour to reduce tobacco consumption. Every study undertaken throughout the world has demonstrated an inverse relationship between price and consumption: the more tobacco products cost, the lower is their consumption. There is also a correlation between consumption and the impact on health of tobacco, so the argument in favour of raising prices, reducing consumption and thus increasing the nation's health is extremely powerful.
| Next Section
| Index | Home Page |