Minimum Excise Tax
Published 5 December 2016
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Who is likely to be affected
Manufacturers, importers, distributors, retailers and consumers of cigarettes.
General description of the measure
This measure introduces a Minimum Excise Tax (MET) for cigarettes. An MET will set a minimum level of excise duty for any packet of cigarettes. This means that the total excise duty on a packet of cigarettes is the higher of either the MET, or the usual application of duties.
The rate of the MET will be announced at Budget 2017.
Policy objective
Introducing an MET will support public health objectives, tackle the very cheapest cigarettes and promote fiscal sustainability.
Background to the measure
The government announced at Budget 2016 that an MET would be introduced in Finance Bill 2017. This followed a formal consultation with stakeholders.
Detailed proposal
Operative date
This measure will have effect through Finance Bill 2017.
Current law
The structures of duties on tobacco products are set out in the Tobacco Products Duty Act 1979. The duty rates on tobacco products are set out in the table in Schedule 1 to the Tobacco Products Duty Act 1979.
Proposed revisions
Legislation in Finance Bill 2017 will amend the Tobacco Products Duty Act 1979.
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|---|
The final costing will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at Budget 2017. Until the rate is set, it is not possible to estimate the precise impacts of the change.
Economic impact
Until the MET’s rate is announced at Budget 2017, it is not possible to estimate the impacts of the change.
Impact on individuals, households and families
Until the MET’s rate is announced at Budget 2017, it is not possible to estimate the impacts of the change.
Equalities impacts
Due to differences in cigarette consumption, any change to cigarette duties will have a small equalities impact that reflects cigarette consumption trends across the adult population.
Impact on business including civil society organisations
The introduction of the MET will impose negligible one off and on-going costs to businesses, which will need to familiarise themselves with the new duty and integrate it into existing duty accounting systems and processes.
Operational impact (£m) (HMRC or other)
Introducing the MET will impose a negligible one-off cost on HMRC.
Other impacts
Health impact assessment: this will be assessed when the rate of MET is set. Other impacts will be considered when the rate of MET is set.
Monitoring and evaluation
The measure will be kept under review through communication with interested parties.
Further advice
If you have any questions about this change, please contact the Excise and Customs Helpline on Telephone: 0300 200 3700.