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U.K. Government to Narrow Tax Difference on Cheaper Cigarettes

March 23 (Bloomberg) -- The U.K. government said it will “narrow” the difference between the taxes levied on cheaper and more expensive cigarettes.

The government “has no further changes to announce to those rates of alcohol duty put in place by the previous government,” Chancellor of the Exchequer George Osborne said today as part of his budget speech in the House of Commons. Rates on tobacco will increase by 2 percent above inflation, as previously announced. The government will also “narrow the differential” between cigarettes and hand-rolled tobacco.

The U.K. government has increased income tax and is implementing the deepest spending cuts since World War II to combat a record budget deficit. Osborne said today that the British economy will grow more slowly than forecast in 2011, rising 1.7 percent instead of 2.1 percent.

The government announced in November that it planned to increase taxes on beer containing more than 7.5 percent alcohol by volume and cut duties on beer below 2.8 percent alcohol. It also announced in January that it would set minimum prices for alcoholic drinks, banning supermarkets and pubs and bars from selling beverages at less than their rate of duty plus value-added tax in an attempt to cut binge drinking.

To contact the reporter on this story: Clementine Fletcher in London cfletcher5@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.

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