If they don't want people to smoke then stop selling the stuff.

2012-13

Source: HM Revenue & Customs (HMRC) / TMA This table shows the revenue raised through the sale of all tobacco products in the UK. The source for the excise duty is HMRC while the VAT is a TMA estimate.

Excise     VAT  £ billion     Total

9.7           2.6                      12.3

18 March 2015

Responding to today’s Budget announcement, Giles Roca, Director General of the Tobacco Manufacturers’ Association (TMA), said:

“The decision to increase tobacco duties by 2% above inflation is simply a continuation of a failing tobacco tax policy, which according to the OBR is now expected to deliver around £6bn less in revenue over the course of the next Parliament. At the same time the illegal market is clearly growing as price conscious consumers seek cheaper products elsewhere. The illegal market cost HM Treasury £2.1bn in 2013/14 and whilst we recognise the Government’s commitment to a renewed Anti-Illicit Tobacco strategy, further tax rises will simply undermine these efforts.”

“The announcement of further tax rises is compounded by the Government’s decision to push ahead with plain packaging of tobacco products. The regulations make no allowance for the continued use of an on-pack security and authentication tool which has been voluntarily developed and implemented by industry and is now being used by HM Revenue & Customs. We said all along that plain packaging will be a gift to the criminal gangs who wish to flood the UK market with cheap, counterfeit tobacco and the Government is helping to make this a reality.”

According to HMRC’s Measuring Tax Gaps Report , in 2013/14 the illicit tobacco market cost the Government £2.1bn in lost taxes, an increase of £500m on 2011/12 figures.

Example of Pre-Budget prices of cigarettes & hand rolling tobacco

Typical pack of 20 premium cigarettes
UK £ 8.99
Spain £ 3.78
Poland £ 2.74

Hand rolling tobacco (50gr)
UK £ 18.09
Belgium £ 5.79