£115m tax loss risk as Northern Ireland smokers turning to untaxed tobacco
More than half of smokers in Northern Ireland said the rising price of cigarettes has tempted them to buy untaxed tobacco.
A survey claimed there are shocking levels of illegal trade and tax avoidance among smokers here.
The Tobacco Manufacturers' Association, which carried out the analysis, said people are pushed to buy untaxed cigarettes because the government has made legal ones so expensive.
Its report claims the government could be losing out on up to £115m in revenue from Northern Ireland - part of a £3bn UK-wide shortfall.
Giles Roca from the association said: "These results reveal the true extent of how the government's high tax policy, in creating some of the highest tobacco prices in Europe, has continued to push Northern Ireland smokers to buy from non-UK duty paid and illegal sources.
"High taxes have cost the Treasury billions of pounds in lost revenues whilst giving a boost to the criminals who are behind the illegal trade."
Key report findings include:
- 55% of Northern Ireland smokers agreed that rising legal tobacco prices tempt them to buy untaxed tobacco;
- 43% also agreed that recent regulatory changes to tobacco packs made them more likely to buy untaxed tobacco;
- 71.6% of smokers here buy untaxed tobacco including from abroad and at duty free;
- 15% of Northern Ireland smokers spend over £1,000 a year on illegal tobacco;
- One in four smokers here are aware of illegal tobacco in their area - but only 3% reported it;
- 65% of Northern Ireland smokers who have seen illegal cigarettes said that it cost less than half its legal retail price.
Since 2010, taxes on cigarettes have risen by 65%, with taxes on roll your own up by 75%.
The Tobacco Manufacturers' Association claimed the high tax policies had made UK tobacco the most expensive in the EU, and claimed it was pushing smokers to purchase tobacco from the black market and from abroad and at duty free.
It says the Treasury lost £3.1bn of revenue because of this in 2016-17. Northern Ireland's share, based on population, would be £115m.
Mr Roca added: "The regulations that came fully into force this year banning small tobacco packs and introducing plain packaging that were backed by both Westminster and Stormont are also making the problem worse by pushing smokers towards the illicit market rather than encouraging them to quit.
"We welcome ongoing efforts by PSNI and HMRC to tackle the problem of illegal trade but their job has been made much harder by the decision to raise tobacco taxes again at the most recent Budget."