The report which was released this month on the the journal of Public Health, suggests that these cigarette companies pay hundreds of millions of pounds in tax overseas but consistently pay less than the headline rate in the UK. The researchers found that in 2016, Imperial Brands, British American Tobacco (BAT), and Gallaher, a subsidiary of Japan Tobacco International (JTI), made UK operating profits of more than £1bn between them, but only paid £83.6m combined in tax, a rate of less than 10%.
The three tobacco companies have disputed the report’s findings. A spokesperson for Imperial Brands said that the report made a number of estimates that the company does not recognise, adding that in 2018 Imperial paid a corporation tax of £50m. “Our total tax contribution in the UK is approximately £4.5bn annually, making us one of the highest UK tax contributors.”
Similarly, JTI said that it paid all taxes that were due, including £138m in corporation tax from 2013-17 and £3.7bn in excise duty. While BAT said it had reduced its tax liabilities by putting £500m into its pension scheme between 2011 and 2016. “In 2017, once we take account of everything we do in the UK, our UK corporation tax payment totalled £26m,” it said.
The need for a tax reform
On the other hand, the report authors said that their analysis indicate that UK taxation rules need to be reformed. “The UK needs better reporting and corporate taxation standards,” they said, adding “The lack of tax revenue generated from such a profitable industry, together with reports of firms in other industries being similarly positioned (16-20), suggests that UK corporation tax policy needs urgent reform to make sure all firms pay meaningful amounts.”
Read Further: The Guardian