I've got a piece up at
The Critic about the hopeless OBR and my struggle to get HMRC to face up to the size of the tobacco black market.
As I have said several times before, it is a mathematical impossibility for illicit tobacco to make up only 13.8% of the total market (as HMT claims). The number of cigarettes sold legally in the UK fell from 23.4 billion to 14 billion between 2021 and 2024 - a drop of 40% - and the amount of hand-rolling tobacco sold legally fell from 8.6 million kilograms to 4.5 million kilograms - a drop of 48%. At the same time, according to the ONS, the total number of smokers fell by 20%, from 6.6 million to 5.3 million. In other words, legal tobacco sales have been falling at more than twice the rate as the number of cigarettes that are being smoked. It is blindingly obvious that the black market has picked up the slack.
... Even if you assume that there was no illicit tobacco sales in 2021, the data since then shows that they must now make up 28% of the market, twice as much as HMRC claims. And since there clearly was a black market for tobacco in 2021, the true figure must be even higher.
I didn't mention it in the article because it's too dull, but if you're wondering where I got the 28% figure from, it is derived from the following...
2021: 31,988 billion cigarettes sold legally (including hand-rolled cigarettes, based on 1,000 cigarettes per kilogram).
If this had declined by 20%, in line with the drop in smoking prevalence, there would be 25,590 billion cigarettes sold legally in 2024.
In fact, there were only 18,465 billion cigarettes sold legally in 2024.
This makes a shortfall of 7,125 billion cigarettes sold legally, which is 28% of 25,590 billion.
As the excellent
Geoff Vann has pointed out on Twitter, more big taxes rises have already been pencilled in for next year, although the government has decided not to introduce a massive 10% plus inflation tax hike on rolling tobacco, as recommended by the political arsonists at ASH.
ASH's prohibitionists reckon the policy of even heavier taxation of rolling tobacco has "worked" because the proportion of smokers buying it as dropped. A much more plausible explanation is that fewer people feel the need to resort to rolling tobacco now that they can buy real cigarettes for a fiver on the black market.
As
Geoff also points out, the ONS is a bit of an outlier when it comes to estimating smoking prevalence. The Smoking Toolkit study and ASH's own study show little or no decline in the smoking rate since 2021. I'll continue to rely on the ONS figures because they are official statistics, but if the other surveys are right, the black market must be bigger still.
