A senior aide to Conservative leader Kemi Badenoch has suggested that the party could consider cutting tobacco duty, arguing that Britain’s high cigarette taxes may be encouraging a growing black market and reducing tax revenue.
Jack Rankin, Badenoch’s Parliamentary Private Secretary and the Conservative MP for Windsor, made the comments during a fringe event at the Conservative Party conference.
Rankin did not suggest that reducing tobacco duty would be an immediate priority for a Conservative government, but argued that there was a case for examining whether current tax rates had gone beyond the point at which they maximise revenue.
Laffer Curve Argument Behind the Proposal
The MP based his argument on the Laffer curve, an economic theory suggesting that increasing a tax rate beyond a certain point can eventually reduce the amount of money collected because consumers seek ways to avoid the tax.
Rankin argued that tobacco provides an example of this problem, pointing to the scale of Britain’s illicit cigarette market.
He said a significant proportion of cigarettes consumed in the UK were illicit and highlighted the substantial difference between the cost of illegal tobacco and legally purchased cigarettes.
‘Clear Case’ for Reviewing Tobacco Duty
Rankin argued that the price gap creates a powerful incentive for consumers to turn to illegal tobacco.
He said illicit cigarettes could cost only around £3.50 a pack, compared with approximately £20 for a legal packet bought in a shop.
According to Rankin, that disparity helps explain why the illegal market has become so significant.
He suggested the Treasury could potentially collect more revenue by lowering the tax burden rather than continuing to raise it.
Billions Could Be Lost to Illegal Tobacco
The Windsor MP claimed the Exchequer could be losing between £1.7 billion and £4.7 billion because of the illicit tobacco market, depending on the assumptions used to calculate the figure.
He argued that this demonstrated why tobacco duty should be examined through the same Laffer curve principle.
His broader point was that there is a level at which increasing a tax rate no longer produces additional revenue and can instead encourage avoidance and evasion.
Rankin Says Cut Would Not Be Immediate Priority
Despite making the case for lower tobacco taxes, Rankin stopped short of presenting a duty cut as an immediate Conservative policy commitment.
He acknowledged that such a measure would not be at the top of the party’s agenda if it returned to government.
His comments nevertheless suggest that tobacco taxation could become part of a wider Conservative debate about the effectiveness of so-called sin taxes.
Conservative MP Attacks ‘Sin Tax’ Approach
Rankin also criticised a broader approach to taxation aimed at discouraging behaviours considered unhealthy or undesirable.
He described some sin-tax policies as both illiberal and ineffective.
The MP argued that certain policies had been driven by civil servants with what he characterised as a strong ideological belief in encouraging healthier lifestyles through taxation.
His comments reflect an ongoing Conservative debate over the balance between public health objectives, individual choice and the use of taxation to change consumer behaviour.
Smoking Ban Creates a Political Backdrop
The discussion comes against the backdrop of Britain’s major change to tobacco policy.
Former Conservative leader Rishi Sunak announced plans during his final Conservative Party conference as leader to prevent people born on or after 1 January 2009 from ever legally buying tobacco.
The proposal was not completed before the 2024 general election, but the Labour government subsequently continued with the legislation.
The Tobacco and Vapes Act became law in April, with the new restrictions scheduled to come into force from next year.
Badenoch Faces Debate Over Future Tory Tax Policy
Rankin’s intervention provides another indication of the policy debates facing Badenoch’s Conservatives as the party considers how it would approach taxation if it returned to power.
Reducing tobacco duty could appeal to those concerned about the growth of illegal cigarette sales and lost Treasury revenue, but it would also raise questions about the public-health objectives behind high tobacco taxes.
For now, there is no indication that the Conservatives have formally adopted Rankin’s proposal as party policy.
His comments instead open the door to a debate over whether Britain’s tobacco tax regime has reached a level where further increases could become counterproductive.
