Tobacco smugglers are costing the Treasury more than £4bn a year in lost duty revenue, but independent retailers believe Chancellor Gordon Brown won't see that as a sufficient reason to call a halt to his annual hike in cigarette taxation in the Budget on April 17. Duty on a packet of 20 cigarettes has risen by £1.57 over the past 10 years but in a straw poll taken among The Grocer 4 Independents' readers this week, everyone questioned believed that cigarettes would be hammered again. The unanimous view of independent retailers was also that the Chancellor was unlikely to freeze duty on beers, wines and spirits, as he did last year. Although there is a lot of optimism in the independent sector (see Business Barometer survey results), neighbourhood retailers remain sceptical as Budget Day approaches, and feel that neither the Chancellor nor the government understand the problems they face. Perhaps the most surprising element of the straw poll was that some independents felt that Brown might increase the current VAT rate, although others believed that to be unlikely. Margaret Noble, proprietor of a general store in Stroud, Gloucestershire, believed cigarettes, alcohol and vehicle duty would be increased on April 17. She said: "Years ago, we might have made a penny or two when cigarette duty increased, but we have now lost that trade to the bootleggers. It wouldn't surprise me if the Chancellor raised the VAT on things such as confectionery, snacks, ice cream and fizzy drinks, because the government thinks all those things are bad for us." Noble accused the government of damaging small shops and called on the Chancellor to reduce business rates and relieve the small store sector of tasks such as the working families tax credit and stakeholder pension obligations. Ian Forbes-Smith, owner of the Rhosneigr Supermarket near Anglesey, north Wales, was another who believed duty would rise on alcohol, tobacco and fuel. He said he wouldn't rule out a VAT increase, either. "The Chancellor won't want to raise direct taxation but someone will have to pay for the increased spending on health and education." Arif Ahmed, proprietor of Ahmed News in Coventry, believed duty and VAT rates should be lowered, but he added: "Cigarettes are an easy target and I foresee another big duty increase next month. The Chancellor should lower business rates, simplify VAT accounting and use the big stick to force the banks to lower their charges to small businesses." Ahmed said he believed neighbourhood stores were being driven out of business by criminals. "We need government help to fund the use of computers and security equipment. Brown should cut the increasing red tape we are faced with. He doesn't seem to realise we've got our backs to the wall." {{GROCER CLUB }}