University of Bath researchers: Cap cigarette profits
Researchers in Bath have urged the Government to cap cigarette profits.
A team at the University of Bath says an independent regulatory agency should be set up to limit excessive profits made by cigarette manufacturers and raise an extra £500 million per year of tobacco tax.
The creation of an Ofsmoke-type agency to regulate the industry, similar to those in force for utility companies, would increase tax revenue and protect public health, according to an article published in the journal Tobacco Control.
The Bath study says the potential increase in UK annual tobacco tax revenue of approximately £500 million would fund, twice over, current UK-wide anti-tobacco smuggling measures and smoking cessation services in England including the various prescription therapies to help people give up.
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The profit margins of cigarette manufacturers can be double those of most other companies.
Dr Robert Branston, from the Centre for Governance and Regulation at the university’s School of Management and Professor Anna Gilmore, from the its UK Centre for Tobacco Control Studies, say regulation would set a maximum price that cigarette companies could charge for their product, based on an assessment of genuine operational costs.
Retail mark-up would not be affected, or the price that consumers pay, but what the researchers call the excess profit currently accrued by cigarette manufacturers would be transferred to the Treasury through increased tax.
The system would be set up at no cost to the consumer or taxpayer, and be funded instead through a levy or licence fee paid by tobacco companies.
Dr Branston said:“The market has failed to curb cigarette manufacturers in terms of pricing power and profit.”