The illicit trade in tobacco and alcohol see-sawed in 2010, with black market tobacco sales taking a tumble while illicit beer sales rocketed.
According to HMRC’s Measuring Tax Gaps report, sales of illicit beer shot up by 45% to £800m in 2009-10.
The Federation of Wholesale Distributors (FWD) is calling for the introduction of duty stamps on beer bottles and cans to help the public distinguish between illicit and legitimately sourced products, and protect retailers from unintentionally buying non duty-paid stock.
The illicit cigarette market’s share of sales fell by three percentage points during the same period, from 19% to 16%.
However, the figures do not take into account the effect of substantial tax hikes in the legitimate cigarette market
at the start of 2011.
Commenting on the figures, outgoing Tobacco Manufacturers’ Association (TMA) chairman Christopher Ogden said: “The TMA and its member companies welcome the reduction in illicit tobacco volumes. Nevertheless, the fact that up to 16% of cigarettes and 50% of RYO is smuggled, losing revenue of £3.1bn, clearly shows it is still a very serious issue.
“In addition, it should be noted that these figures refer to 2009/10, and since then tobacco taxation has increased markedly, leading to the price of cigarettes rising by as much as £1 per 20.
“High tobacco taxes are an acknowledged driver of this illegal trade and there is widespread concern that the increases imposed over the past 18 months will lead to a rise in this criminal activity,” he added.
According to a recent survey by the Tobacco Retailers Alliance six out of 10 retailers are aware of illicit tobacco being sold in their area.