Smuggled cigarettes 'must be taxed'

Gordon Brown is under pressure to levy a "windfall tax" on tobacco companies that profit from sales of smuggled cigarettes.

Customs and Excise estimates that 17 billion cigarettes were smuggled into Britain in 2000-2001, costing the Exchequer £2.8bn in duty. Its chairman, Richard Broadbent, said he was reliant on the tobacco firms in combating smuggling, but the level of cooperation was "patchy".

In a hearing of the Commons Public Accounts Committee last week, Gareth Davis, the chief executive of Imperial Tobacco, was pressed to explain why more was not being done by the industry to tackle the problem.

Today, Geraint Davies, a Labour member of the committee, said the tobacco firms' failure to deal effectively with smuggling had to be penalised.

"There should now be a windfall tax or penalty. The Chancellor must try to recover some of that money from corporate profits that were clearly made either by encouraging or condoning illegal activities," he said.

Imperial Tobacco's brands Regal and Superkings account in total for half of all smuggled cigarettes seized by Customs in 2000/1.The company could find itself isolated when Customs signs a memorandum of understanding on smuggling with Britain's biggest tobacco company, British American Tobacco.

A spokeswoman for Imperial said: "Smuggling is not just an Imperial Tobacco problem but a worldwide problem."