A five per cent rise in tobacco tax would lead to a substantial drop in the number of smokers and save millions in health costs, a UK charity suggests.

Such an increase would discourage children from buying cigarettes and help adults quit, a report by Action on Smoking and Health (Ash) says.

Its chief executive, Deborah Arnott, said: "Smoking is a childhood addiction and not an adult choice."

But smokers' rights lobby group Forest said cigarette smugglers would gain.

Director Simon Clark said: "The only people who will benefit from raising tobacco taxation by this amount are the criminal gangs who will smuggle millions of cheap cigarettes into the country from Eastern Europe and elsewhere."

Health benefits

He added that many counterfeit cigarettes would be sold in pubs and on street corners on the black market, costing the Treasury up to £3bn a year.

Support for a five per cent price rise above inflation comes from Cancer Research UK, the British Heart Foundation and the Foundation for the Study of Infant Deaths (FSID).

Ash's report says that raising tobacco prices would reduce the number of smokers by 190,000 and save the NHS more than £20m a year by cutting the cost of treating smoking-related diseases.

It also claims a tax rise would also reduce smoking-related absenteeism in the workplace, saving more than £10m a year.

Supporters also say government tax revenues would be boosted by more than £500m a year and result in wider economic benefits in the first five years of more than £270m a year.

Ash outlines its call on tobacco prices in a pre-Budget submission to the Treasury.

Its head, Ms Arnott, said: "By increasing tobacco taxation, we help to discourage children from buying cigarettes. An above-inflation rise would also help adults stop smoking."

FSID director Joyce Epstein said: "Scientific evidence shows that every year the lives of over 100 UK infants could be saved if no pregnant woman smoked.

"Smoking by fathers increases the risk of infant death as well. Our organisation supports increasing the price of tobacco because it will encourage smokers to consider quitting and so protect their children."

Imposing higher taxes means fewer people will smoke so less income will be available. The NHS has so much coming through smoking taxes that each smoker has paid the equivalent of private health car for all of their hospital costs.

No Cigarettes have an incredibly low price elasticity of demand so if they increase in price by 5% the decrease in quantity demanded will be 1-2% at best.

What you would be assuming is that there is perfect correlation between price and quantity demanded across all products. However cigarettes are addictive so though they can be considered a luxury they are often treated as a necessity, especially since those most addicted to them are the largest consumers and have the least will to quit.
Tobacco duty currently brings in £7.1 billion for the government far outstripping the cost of them to the NHS massively.
More smokers god-damn-it.

The problem that the government has primarily is that the profits that can be made from smuggling are starting to make smuggling very attractive. even still the government will still have greater tax revenues.

And that idea of saving £10 million a year for smokers who have breaks is BS. because that's a simple mathmatic trick the media love to use to exaggerate the truth. Cumulative amount of time spent on smoking breaks * average wage/ hour= money lost. Which is just a plain logical fallacy.

On balnce an increase in taxes on cigarettes will increase smuggling however will secure greater revenues for the government.