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Excise Duties

Volume 167: debated on Wednesday 14 February 1990

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To ask the Chancellor of the Exchequer what conclusions he has reached from available information on the regressive nature of excise duties on tobacco and alcohol.

The amount of duty paid by a household depends on the expenditure it makes on tobacco and alcohol. As households are free to choose that expenditure in accordance with their own preferences, there is no necessary link between duty payments and income.

To ask the Chancellor of the Exchequer what is the impact of indexation of excise duties by product on (a) inflation and (b) revenues in 1990–91 and a full year.

The impact of indexation of excise duties by product on the retail prices index and revenues in 1990–91 and a full year is shown in the table:

Duty ItemRetail prices indexRevenue/Yield 1990–91Revenue/ Yield Full year
Per cent.£ million£ million
Tobacco0·16265290
Petrol0·14480495
Derv0·01110115
Beer0·07160175
Wine0·065555
Spirits0·048085
Vehicle excise duty0·06230230
Cidernegligible55
Rebated oilsnegligible1515
Total0.541,4001,465
The indexation factor used is the 7·7 per cent. rise in the retail prices index between December 1988 and December 1989.

To ask the Chancellor of the Exchequer what is the proportion of excise duties, broken down by product, paid by those on different incomes.

I refer the hon. Member to an article entitled "The effects of taxes and benefits on household income, 1986" in the December 1988 issue of Economic Trends.