CONFERENCE PROCEEDING
Eroding the floor: The weakening impact of the UK’s minimum excise tax on tobacco
1
University of Bath, Bath, United Kingdom
Tob. Prev. Cessation 2026;12(Supplement 1):A48
ABSTRACT
BACKGROUND-AIM:
Tobacco taxes are among the most effective measures to reduce tobacco use, but their success hinges on raising retail prices. Jurisdictions with ad valorem or mixed taxes often employ a Minimum Excise Tax (MET) to set a price floor, preventing very low-priced products from undermining tax policy. The UK introduced an MET on factory-made cigarettes in May 2017, successfully raising prices for economy brands. Since then, the MET and other tobacco taxes have increased annually above inflation, against a backdrop of major market changes, Brexit, and an inflation-driven cost-of-living crisis. This study explores whether the MET has continued to be fully passed on to consumers and therefore remains effective. A question of high significance given the UK’s position as a global tobacco control leader with some of the highest prices worldwide, its former EU membership where METs are central to the Tobacco Tax Directive, and the broader global reliance on tax-driven price increases to reduce tobacco use.
METHODS:
We analysed NielsenIQ weekly brand-level sales data (Jan 2023-Jun 2024) and triangulated with systematic supermarket price tracking, to assess the impact of two above-inflation tax increases (Mar and Nov 2023). The size and speed of retail price adjustments is explored, including the duration before brands crossed the MET threshold. A further 18 months of data, to be collected by end-2025, will support a long-term assessment of the MET’s effectiveness.
RESULTS:
Findings show a substantial proportion of cigarette brands remained below the MET-implied price well after tax increases. In December 2023, over half (54%) of tracked brands were below the MET price point the month after the tax increase, with many still below by the next tax increase. Even by mid-2024, notable gaps persisted, with some economy brands priced nearly £1 under the minimum expected price. Price adjustments were gradual, with the industry appearing to absorb part of the tax increase to keep prices of economy brands low, eroding the MET’s role as an effective minimum retail price.
CONCLUSIONS:
The UK’s MET on cigarettes is no longer fully functioning as intended, allowing cheap brands to persist at prices undermining tax policy. These results have clear implications for the EU’s Tobacco Tax Directive and for any jurisdiction relying on METs as a de facto price floor. Strengthening policy design will be essential to ensure that METs deliver sustained public health gains.
Tobacco taxes are among the most effective measures to reduce tobacco use, but their success hinges on raising retail prices. Jurisdictions with ad valorem or mixed taxes often employ a Minimum Excise Tax (MET) to set a price floor, preventing very low-priced products from undermining tax policy. The UK introduced an MET on factory-made cigarettes in May 2017, successfully raising prices for economy brands. Since then, the MET and other tobacco taxes have increased annually above inflation, against a backdrop of major market changes, Brexit, and an inflation-driven cost-of-living crisis. This study explores whether the MET has continued to be fully passed on to consumers and therefore remains effective. A question of high significance given the UK’s position as a global tobacco control leader with some of the highest prices worldwide, its former EU membership where METs are central to the Tobacco Tax Directive, and the broader global reliance on tax-driven price increases to reduce tobacco use.
METHODS:
We analysed NielsenIQ weekly brand-level sales data (Jan 2023-Jun 2024) and triangulated with systematic supermarket price tracking, to assess the impact of two above-inflation tax increases (Mar and Nov 2023). The size and speed of retail price adjustments is explored, including the duration before brands crossed the MET threshold. A further 18 months of data, to be collected by end-2025, will support a long-term assessment of the MET’s effectiveness.
RESULTS:
Findings show a substantial proportion of cigarette brands remained below the MET-implied price well after tax increases. In December 2023, over half (54%) of tracked brands were below the MET price point the month after the tax increase, with many still below by the next tax increase. Even by mid-2024, notable gaps persisted, with some economy brands priced nearly £1 under the minimum expected price. Price adjustments were gradual, with the industry appearing to absorb part of the tax increase to keep prices of economy brands low, eroding the MET’s role as an effective minimum retail price.
CONCLUSIONS:
The UK’s MET on cigarettes is no longer fully functioning as intended, allowing cheap brands to persist at prices undermining tax policy. These results have clear implications for the EU’s Tobacco Tax Directive and for any jurisdiction relying on METs as a de facto price floor. Strengthening policy design will be essential to ensure that METs deliver sustained public health gains.
| eISSN: | 2459-3087 |
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