Jonathan Isaby is Chief Executive of the TaxPayers’ Alliance.
I daresay many ConHome readers were, like me, surprised and perplexed when Jane Ellison used her reply to a Labour MP’s adjournment debate last month to announce that the Government would put plain packaging of cigarettes to a Commons vote before the General Election.
And I gather my sense of surprise was shared by those inside the Home Office and Treasury – both of which have serious reasons to be deeply sceptical about such a move.
Parliament may now appear to have run out of things to do (despite the fact that all legislation is subject to strict timetables, meaning there is insufficient time for proper scrutiny of bills which do badly need it), but the last thing we need is new laws being passed simply to while away parliamentary time during the fag end of this Parliament.
There are numerous reasons why plain packaging strikes me as an ill-thought through, simply bad policy.
There’s the sense that another intervention in this (already highly-regulated) market is a deeply illiberal and un-conservative move which further interferes with a lawful business transaction between consenting adults.
There’s the fact that in the one country where such a policy has been pursued – Australia – there is a lack of indisputable evidence that it has affected consumption rates.
And of course under EU legislation, it has already been decided that 65 per cent of packaging will be taken up with health warnings as of next year in any case.
Proponents will say that it is all about promoting improved public health. But I would submit that with all the existing education undertaken in this area and the warnings on cigarette packets, no-one can be in any doubt that smoking is bad for your health.
At the end of the day, people need to take a degree of personal responsibility for the decisions they make about how they wish to live their lives.
And for those who say it is all about stopping the promotion of cigarettes to children, we only need look at the figures from the ONS to see how education has massively reduced smoking rates over time.
But let’s disregard all those arguments and concentrate solely on the likely economic cost to the country – in other words, we taxpayers – of pursuing this policy.
Just the other day, Damian Green explained on this site how plain packaging would make life easier for criminals involved in the illicit tobacco trade.
It stands to reason that cigarette packets free of any branding whatsoever would be infinitely easier to forge, making the measure tantamount to a counterfeiters’ charter.
And guess what? An increase in illicit tobacco sales would mean a decrease in tobacco duty collected by the government from legitimate sales. Here the evidence from Australia is clear: since the introduction of plain packaging, the previous downwards trend in illicit sales has been reversed as the black market has hit a new high, with a 24 per cent jump in illicit sales in just two years.
So if anticipated revenues from that one tax do not materialise, we could not be blamed for concluding that politicians would then seek to raise taxes elsewhere in order to make up the shortfall – bad news for all of us.
And that’s before you get into the potential cost to taxpayers of compensating tobacco companies for the loss of their intellectual property if plain packaging is enacted.
Like them or not, the Human Rights Act and EU Charter of Fundamental Rights (by which the UK remains bound) provide protection against the confiscation of property, intellectual or otherwise, the deprivation of which would result in the need for suitable compensation.
Studies by Citi Group and BNP Paribas have estimated that such compensation could amount to a figure of between £5 billion and £11 billion. Since all major tobacco companies have indicated their intention to take the Government to court if this policy is introduced, this is no longer idle discussion about a hypothetical situation.
Combining the likely loss in tax revenue and potential compensation bill amounts to an eye-watering figure for which taxpayers would be left on the hook.
The public finances are in bad enough a state already, without the Government opening up this kind of self-inflicted wound.
The politicians pursuing this policy are risking billions of pounds of our money for the sake of the branded 35 per cent of the cigarette packets which will in any case be hidden away in those unmarked cabinets behind the shop counters.
If we are to have any hope of eradicating the deficit and seeking tax cuts in the years to come, plain packaging is a policy that we simply cannot afford to countenance.