A maximum price cap for cigarettes sold in the UK would help reduce smoking rates, a study has found.
A price cap set by a tobacco regulator would provide only minimal benefit to companies, researchers at the University of Bath have said.
Currently, tobacco companies have generally been able to shield smokers from the full impact of regular cigarette tax increases by keeping the prices of some products low and offsetting the costs with increases on their other high-end products. according to the study.
This means that there is currently a wide variation in cigarette prices in the UK – a difference of up to £5 between the cheapest and most expensive brands, from around £9.75 at the lowest at 14 £.65.
A price cap, by comparison, would effectively mean that there was a standardized cost for cigarettes, which would help make future tax increases “much more effective”.
Similar to utility regulation, a wholesale price cap on cigarettes would be imposed by the government or a regulator. Excise duties, sales taxes, retailer markups and any other legitimate costs would be added to this price to produce an in-store price.
The UK tobacco tax is already one of the highest in the world and accounts for a large majority of the cost of tobacco in stores, but this varies by product.
Previous research from the same team at the University of Bath found that hand-rolling tobacco is taxed at lower rates than factory-made cigarettes.
The World Health Organization has expressed concern about the methods used by tobacco companies to counter tax increases, such as overproducing before a tax increase, subtly altering the weight or size of a product so that it falls into a lower tax bracket, the use of price promotions such as rebates, rebates, and giveaways to counter tax increases, and spread tax increases by raising the prices of brands of luxury while absorbing tax increases on cheaper products.
Researchers said tobacco companies in the UK have kept customers price sensitive by reducing pack sizes, while in Australia packs come in more than 10 different sizes, so after each tax increase, most smokers could find either a smaller product cheaper. before, or a larger product that is cheaper per stick or per gram.
Around 5.5million adults (13.5%) smoked in the UK in the first quarter of 2020, according to the latest figures from the Office for National Statistics.
Dr Rob Branston, from the Tobacco Management and Control Research Group at the University of Bath, and author of the study, said: “We know that using the tax to increase the price of cigarettes is one of the most cost-effective ways to reduce smoking. .
“However, in many countries, including the UK, we also know that tax increases can often be undermined by the pricing strategies of tobacco companies.”
He added: “Countries like the UK, with a strong regulatory tradition, could lead the way and international cooperation could build regulatory capacity, reduce costs through shared testing and respond to industry attempts to transfer pricing.
“At this stage we would like the UK government to announce that they are considering continuing this policy as part of their new tobacco control plan to make England smoke-free by 2030.”
Simon Clark, director of smokers’ lobby group Forest, said: “By reducing the number of price tiers, a price cap on cigarettes would be another attack on consumer choice. Worse still, it would almost certainly lead to further increases in the cost of lower-priced brands.
“This would not only discriminate against less affluent smokers, it could drive many more consumers into the unregulated black market where criminal gangs will sell cigarettes to anyone, including children.”
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