Tobacco: Excise Duties
The question
To ask the Chancellor of the Exchequer, what assessment HMRC has made of the potential merits of using alternative data sources on smoking incidence to calculate tobacco tax estimates.
Answered by James Murray
The tobacco duty forecast starts by generating an in-year estimate for receipts in the current year based on the year-to-date performance of receipts. Future tobacco duty receipts are then forecast from that starting point based on inflation (CPI and RPI), real household consumption and underlying trends in tobacco consumption. Smoking incidence rates impact receipts and are accounted for via the in-year receipts estimate and underlying trends in tobacco consumption.
The Office for Budget Responsibility (OBR) provide further details on the tobacco tax receipt forecast on their Tobacco duties forecast webpage.
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