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Black market in the UK Worth GBP32 Billion
 LONDON – Smuggled cigarettes, beer and, diesel could be the reason that UK taxpayers are not being granted tax breaks.

The results of new research released by the UK based Taxpayers Alliance on November 14th shows that the UK government could cut the basic rate of income tax by 1.5 percent, if it could reign in black market activity.

It is estimated that between the 2010-11 financial year and the 2014-15 financial year, the government lost out on tax revenues of as much as GBP 31.6 billion through black market sales of tobacco, alcohol, and diesel.

The largest portion of the losses was due to black market sales of cigarettes, followed by beer, hand rolling tobacco, diesel, spirits, and wine.

Even if the estimates for the impact of the smuggling are overstated, the lower limit estimates would still result in tax losses worth GBP 18.1 billion, which would allow the government to cut income tax by 1 percent.

It was noted that due to the inelastic demand for the often-smuggled products, any further hikes to the duties and taxes on the sale of these goods would probably exacerbate the extent of the losses.

Tags:  tobacco taxation
