U.K. Not Doing Enough to Stop Tobacco Smuggling, Lawmakers Say

The U.K. needs to step up action against tobacco smugglers and money earmarked for new initiatives shouldn’t be used for business as usual, a panel of lawmakers said.

The government should also tackle companies that oversupply tobacco to European countries where it’s bought for smuggling into Britain, the House of Commons Public Accounts Committee said in a report published today. Supply of hand-rolling tobacco exceeded legitimate demand by 240 percent in one unidentified country, the report said.

“Each year tobacco smuggling constitutes a theft of revenue to the tune of some 1.9 billion pounds, 20 percent of the total sum collected in tax” by Her Majesty’s Revenue & Customs, the committee chairwoman, Margaret Hodge, said in an e-mailed statement. “What concerns us is that three of the five HMRC initiatives to further tackle smuggling funded from the 2010 spending review had produced nothing by March 2013.”

Estimates for the effect of projects funded in 2010 were “over-optimistic,” the committee said. HMRC and the U.K. Border Force missed their target for additional revenue by 200 million pounds ($320 million), it said.

The committee praised the success of programs in the previous decade. Estimates of market share were 9 percent for illicit cigarettes in 2010-11 compared with 21 percent in 2000-01, and 38 percent for rolling tobacco compared with 61 percent, the report said.

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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