A packet of 20 cigarettes will cost 21p more on Tuesday. First, smokers will have to pay through higher product prices, and second, non-smokers will have to be taxed more because of the losses in government revenue caused by smuggling. Forest claimed that the government had to revise upwards its estimate of the extent of losses through smuggling to 790m in 1997 - 100m more than previously thought. For 1998 the government is estimating that as much as 1bn will be lost from tax revenues. Smuggling keeps cheap cigarettes on the market so that people who would otherwise have given up don't, and remain smokers.
Smuggling also allows the tobacco industry to make the argument for lower taxes in legal markets.
That keeps the price down and consumption up so they can sell more cigarettes. Mr Bates said the solution to the problem was not to reduce taxes, but to step moves to catch and penalise smugglers. Raising taxes on tobacco is extremely important. It is one of the most tried and trusted methods for successfully reducing smoking. People say enough is enough and give up or never start.