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Jersey Review To Inform Tobacco Duty Policy

by Mike Godfrey,, Washington

22 April 2014

A report published by the Channel Islands Competition and Regulatory Authorities confirms that Jersey's cigarettes prices are GBP0.89 (USD1.50) per pack higher, on average, than in the UK. The findings will support the Government in making excise duty policy decisions.

The report suggests that the discrepancy may be due to exclusive supply agreements that prevent the sourcing of cigarettes from other jurisdictions. However, the Jersey Government has leaned on smokers to cut the size of its deficit in recent years. Duty on cigarettes rose from GBP42.91 per 200 cigarettes in 2013 to GBP47.63 in 2014, while 250 grams of hand rolling tobacco saw duties rise from GBP65.13 to GBP72.29 over the same period.

Residents are currently allowed to import 200 cigarettes without duty and beyond this limit they are charged duty of GBP4.76 (USD8.01) per pack. It is thought that bringing prices in line with the UK, potentially through duty changes, will help mitigate tobacco smuggling and excise duty evasion.

Jersey's Economic Development Minister, Alan Maclean, and Treasury and Resources Minister Philip Ozouf, who had commissioned the report, both welcomed the findings.

Maclean said: "This market study highlights another example of a market that is not functioning effectively and is not fully open and competitive. As a result Islanders appear to be paying much higher consumer prices for tobacco products. This report follows a number of market studies which are fundamental to understanding the real cost of living for Islanders and will assist Government in developing policies that aim to deliver fairer prices."

Ozouf said: "It is good to see a detailed analysis appearing to confirm what we have said for a number of years during the annual Budget debates – that it is difficult to understand why prices here compared with the UK are so high. The aim has to be to ensure that we have competitive markets where possible and that duties can raise the appropriate revenue to help fund the costs of the harmful health effects of smoking."

TAGS: tax | law | international financial centres (IFC) | Guernsey | Jersey | excise duty | offshore | agreements

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