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.
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University of Bath
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.”
Comments
by MoeXXX
Tuesday, January 15 2013, 11:41PM
“This article doesn't seem to make any sense, unless I'm missing something. If tobacco companies are making excessive profits, and the solution is to set a maximum price based on operating costs, then they won't be making excessive profits any more will they?
So how can they then convert the "excess profit" into tax? You can't have it both ways.”
by MoeXXX
Tuesday, January 15 2013, 11:35PM
“@Imp-Act - fair enough, but I assume you would also remove medical treatment for drinkers with alcohol-related problems, obese people with weight-related problems, rugby players with sports injuries, road accident victims who choose to drive, pedestrians who choose to walk on icy pavements, the children of parents with known cancer genes that choose to reproduce, etc etc etc.
Actually, might as well abolish state-funded healthcare altogether.”
by Imp-Act
Tuesday, January 15 2013, 10:52PM
“OMG! Let them smoke to their (sick) hearts content BUT cut off ALL their medical treatment that is caused by smoking. The rest of us need the tax they just love paying to fund helpful studies in various cancer research programs.
Just remember this Smokers = Chokers! It leads to a very nasty drawn out DEATH! ENJOY IT! You only get one DEATH!”
by BV_BV
Tuesday, January 15 2013, 11:59AM
“How much profit is made by the tobacco companies in the UK, and how much tax is generated from those sales?
I thought tobacco smuggling was dealt a near-death blow when France increased the duty on tobacco and alcohol so that it was no longer worth the effort for day trippers to go to France.”