United Kingdom Case Study
Facing some of the most significant level of illicit trade in Europe, the UK has managed to reduce illicit trade by adopting moderate increases in fine-cut duties, accepting the affordability constraints of fine-cut tobacco smokers.
The UK currently has imposed some of the highest duties on fine-cut tobacco (FCT) across the European Union. At the same time, the UK has experienced some of the most significant levels of illicit trade in FCT (as high as 62% in 2004-05). Increased enforcement activities and moderate increases of the duties imposed on FCT, have resulted in a reduction in the level of illicit trade to its lowest recorded level of 28% of total FCT consumption in 2016-17. Reflecting the role of FCT as a buffer between FMC and illicit non-duty paid consumption, there has been an improvement in government FCT taxation receipts – by 38% since 2011-12 (equivalent to an additional £338 million since 2011-12).