Reform UK’s Richard Tice has warned Rachel Reeves that proposed hikes in taxes on booze and cigarettes to plug her latest financial blackhole will merely send inflation into overdrive.
On the day Ms Reeves received yet another headache as it was confirmed inflation has risen back up to 3%, Reform is demanding the Chancellor does not make it worse.
In a bid to close the tax gap and fund Labour’s latest outlandish spending pledges, it’s been speculating Rachel Reeves may once again hammer Brits with yet more tax rises on products like alcohol and tobacco.
However, this would fuel even more inflation in the economy, and hit hard-working taxpayers with higher inflation.
The boss of the Institute for Financial Studies Paul Johnson recently warned that tax hikes are looking “inevitable”, after leaked OBR figures suggested that the Chancellor’s ‘headroom’ - the gap between what she’s spending and raising - has fallen to almost zero.
However, the Office for National Statistics (ONS) and others have singled out rises in tobacco and alcohol duty as a leading driver of inflation.
In December 2024, the ONS confirmed that alcohol and tobacco duties are the joint second highest contributor to higher UK inflation.
Meanwhile the The National Institute of Economic and Social Research (NIESR) noted in January 2024 that a rise in tobacco duty announced the Budget contributed 0.13 percentage points to inflation.
They explained: “The increase in tobacco duty from the November Autumn Statement was a significant factor in the contribution of the alcohol and tobacco category to inflation.”
Amid concerns Ms Reeves may pull the level for higher duties on these goods in order to raise extra cash, Reform deputy leader Richard Tice told the Express it would be “economic madness”.
The Boston and Skegness MP warned: “Today’s rocketing inflation jump to 3% is yet another blow to hardworking Britons. The disastrous consequences of Rachel Reeves's budget continue to unfold before our eyes with hardworking British people paying the price.”
“The government’s misguided obsession with ratcheting up tax and duty hikes on everyday items like cigarettes and alcohol has meant that households must bear the brunt of higher bills for longer.
“With the Bank of England forecasting inflation to hit 3.7% this year, further tax and duty rises would be economic madness.
“Reform UK would scrap these barmy measures and focus on helping households keep more of their hard-earned money.”
Last year’s Autumn Budget saw smokers hit with a 2% rise above inflation, while hand-rolling tobacco soared a whopping 12%.
Meanwhile, alcohol duty hikes went up 3.6% on wine and whisky, hitting both consumers and pubs.
In her Autumn Budget, Ms Reeves boasted about supporting pubs by cutting the cost of a pint by 1.7%.
However, she sneakily hid the wine and spirits rise in the small print.
Further down the line of producing, gin and whisky distillers are already facing huge increases in the cost of grain, largely thanks to the war in Ukraine, and have been hit with the hammer blow tax on jobs after Ms Reeves increased National Insurance.
