Researchers urge government to cap cigarette profits
15 January 2013
An independent regulatory agency to cap excessive profits made by cigarette manufacturers should be set up to raise an extra £500 million per year of tobacco tax revenue for the Treasury, say Bath researchers.
The creation of an ‘Ofsmoke’ agency to regulate the industry, similar to those in force for utility companies, would increase tax revenue and protect public health, according to the article published in the journal Tobacco Control .
The study says the potential increase in UK annual tobacco tax revenue of approximately £500 million (based on 2010 data), would fund, twice over, UK wide anti-tobacco smuggling measures and smoking cessation services in England including the associated pharmacotherapies to help people stop smoking.
Cigarette manufacturers currently make roughly double the profits of most other companies. Imperial Tobacco for example has profit margins in the UK of 67 per cent, making it one of the most profitable companies in the UK.
Dr Robert Branston, from the Centre for Governance and Regulation at the University of Bath’s School of Management; and Professor Anna Gilmore, from the University’s Department for Health and the UK Centre for Tobacco Control Studies, say that capping the pre-tax cigarette manufacturers’ price would safeguard society from the market failure behind manufacturers’ pricing power and profits.
