Thursday, September 29, 2011

Roll your own? Bloody tax dodger!

I'm on holiday, so I need some reading material for the bits when we're taking time out from being tourists. A good book, perhaps. But no, I'm a bureaucrat, so something educational, methinks. Indeed, what I have is highly informative, and as you certainly haven't read it, and you almost certainly won't, I feel obliged to give you some snippets...

Today, I've learned about HRT. No, not hormone replacement therapy, hand rolling tobacco. Now, I have to admit that I don't smoke, and never have done. I do rather like the smell of a good cigar, and I find pipe smoke strangely reassuring in its carcinogenic way. However, I've never given tobacco much thought. I do have friends who roll their own - you kind of expect that amongst Liberal Democrats.

What I didn't know is that it is statistically likely that those friends are ripping off the Treasury. In truth, some of them probably know if they are - if you're paying less for it than the usual price, you might logically be suspicious - but if it's being sold to you by a tobacconists, or a corner shop, you may be unduly enriching not only the retailer, but the criminals he or she purchased them from.

You see, HM Revenue & Customs reckon that illicit hand rolling tobacco supplied between 41% and 50% of the total market in 2009-10. Interestingly, that's down quite substantially over four years (the range was from 55% to 64% in 2005-06), but still represents approximately £750 million. And that's a lot of money, about 2% of the estimated tax gap. Put another way, it represents the same amount of money as that lost through incorrect self assessments by non-business taxpayers.

So, when UK Uncut talk about closing the tax gap, here's a statistic that you can quote right back at them. And then ask them what they'll do instead...

3 comments:

Jennie said...

I buy Kendall tobacco, which is about as ethical as tobacco gets, from my local tobacconist because he stocks the flavour I like. I take issue with your suggestion that supporting local businesses is, in this case, an unethical thing.

I very much doubt that any actual shop would risk the huge fines involved in selling dodgy tobacco; pretty much everybody I know who buys rolling tobacco doesn't buy it from a shop anyway; they get it from their friends who go on holiday. One of the previous pubs I worked at, the landlord used to go abroad 6 or 7 times a year and make a profit on every trip just buying tobacco for himself and his mates - and he used to charge them a lot less than shop prices. I think this is probably a much bigger source of loss to the exchequer than local shops, who are struggling enough these days without you putting the boot in as well :P

Mark Valladares said...

Jennie,

If HMRC believes that more than 50% of the hand rolling tobacco used in this country is illicit, my numbers stand up. That doesn't mean that an individual is engaged in tax evasion, it just makes it pretty likely that either you, or your local neighbourhood store, are.

My point is that tax evasion isn't just about big businesses, it's about a frame of mind.

You make an entirely valid point about neighbourhood shops though, as if the profit made from illicit HRT is what keeps them viable, the loss to a community might be seen by some as being a price worth paying.

Jennie said...

I'm not saying you are wrong about the percentage of tobacco which is illicit; in fact, I would suggest that 50% is probably an underestimate.

I am suggesting that you are wrong about the sources of it. It is significantly cheaper to go on holiday and bring back 6 month's worth of tobacco than it is to buy 6 month's worth of tobacco at Tesco. This is a fact. As I said before, most people I know who smoke rollups do this, because if the choice is "tobacco for 6 months" or "tobacco for 6 months plus a holiday plus a cash saving" that's something of a no brainer.

Whereas if you are a shop, stocking dodgy product is seriously not worth it.