Every so often when I am in my shop, I don’t see one of my regular customers - let’s call him Jack - for a few weeks. That’s because he had found a source for his favoured cigarette brand elsewhere in town. My sales of that brand would plummet as a result of Jack, and others like him, taking advantage of the price of smuggled tobacco that I could simply not match.
The knock-on effect of this was not just on sales of the tobacco but also the other goods that Jack and his mates would have bought in my store.
Tobacco smuggling is seriously affecting the livelihoods of independents. As local shopkeepers, we serve the community. The impact of tobacco smuggling threatens to stub out Britain’s network of corner shops.
New research carried out among our 17,000 Tobacco Alliance members shows that one in five independents is considering closing their business as a result of the effects of tobacco smuggling on their sales. Some 32% have considered reducing staff, while 27% have made them redundant. An overwhelming 82% of retailers have lost sales due to tobacco smuggling in the past 12 months. These are alarming results and the government must take action.
The UK remains the most expensive country to buy a packet of legal cigarettes. Today the price of a packet of 20 cigarettes in the UK costs roughly £4.98. Of this, £3.89 goes straight to government. In Belgium, a packet of 20 costs £2.40, in Spain £1.50, with Latvia remaining the cheapest place in the EU to purchase a packet of 20 at 40p.
The Tobacco Alliance calls on the government to cut the price of 20 cigarettes by £1 to remove the gap between the UK and other EU markets as this will remove the incentive for the smugglers to capitalise on the price difference and discourage crossborder shoppers.
Denmark is a prime example of a country that reduced taxes in the face of the threat of smuggling. When the Single Market was formed on January 1, 1993, Denmark had the highest cigarette taxes and prices in the EU. Denmark was permitted, until January 2004, to restrict the volumes of cigarettes that travellers could bring into the country to 100. To combat the potential for smuggling when this provision ended, the Danish government reduced cigarette taxation by 17% in October 2003, to bring its levels more into line with neighbouring
member states. Needless to say, Denmark does not have a smuggling problem.
Another area of concern is counterfeit tobacco. Our new survey shows that a third of independents are aware of fake tobacco products in their area. As HM Revenue & Customs has become more effective at dealing with smugglers, so smuggling gangs are increasingly turning to counterfeit cigarettes from which they can make more profit even when a percentage of their consignments are seized by Customs.
All legal cigarettes bought in the UK have, by law, to declare the tar, nicotine and carbon monoxide values on the packet. These values are usually printed on counterfeit packs, too, but are meaningless and highly misleading in that the cigarettes tend to be of a much higher tar level than legal brands. Put simply, customers do not know what they are buying.
Smugglers do not care to whom they sell their goods. Children have easier access to tobacco on the black market than from legitimate retailers who demand proof of age. The Tobacco Alliance members support the No ID No Sale campaign, which means there is now signage in shops, making it clear that proof of age will be required before any age-related sale is made.
I’ve been a shopkeeper for 20 years in Ballymena and there has been a notable worsening in tobacco-related crime during that period. As a shopkeeper, I can truly say tobacco smuggling is affecting all of us. The government must bring UK tobacco taxation into line with the rest of Europe. If it does not, the situation will just get worse.