Retailers Against Smuggling has welcomed a government report highlighting the problem of tobacco smuggling.

The report, by the Select Committee of Public Accounts, found that Customs and Excise lost £2.9bn from tobacco fraud in 2003-2004 and the figure is set to rise in 2004-2005.

It recommended that a cost-benefit analysis should be carried out to investigate what could be achieved if more resources were allocated to tackling the problem, and that a campaign was needed to raise public awareness of the health risks of counterfeit tobacco.

Retailers Against Smuggling national spokesman Ken Patel, said: "I am pleased that this report draws attention to the problem of tobacco smuggling, and suggests that more resources need to be allocated to tackling it. The UK's tax rate on tobacco is so widely out of line with the rest of the EU that the UK will continue to be a hotbed of smuggling activity while this discrepancy remains."