The U.K. government formally ended the prospect of a levy on tobacco-company profit Wednesday, saying the impact would be the same as increasing duty on cigarettes, just with added complexity, cost and delay.
Imperial Tobacco Group Plc and British American Tobacco Plc shares rose in London after Chancellor of the Exchequer George Osborne made the announcement in his budget speech.
The government said in December it was considering a new levy in tobacco manufacturers and importers, and began a process of consultation. In its General Election manifesto in April, the opposition Labour Party said it would partly fund an increase in National Health Service staffing with such a levy.
Lobby group Action on Smoking and Health criticized the government’s decision. A levy would help cut smoking rates, improve productivity and reduce pressure on the National Health Service, the organization said in an e-mailed response.
Imperial Tobacco rose 1.3 percent to 3,134 pence at 3:30 p.m. in London. The company is the biggest cigarette maker in the U.K., the country representing almost a fifth of sales. BAT gained 1.5 percent to 3,513 pence.