Why sin taxes could play an important role in the UK budget | Wilnesh News

Britain’s Labor government appears set to raise “sin taxes” in its much-anticipated October budget as it seeks to cash in on the lucrative industry to boost Treasury revenue.

Finance minister Rachel Reeves is due to unveil the government budget on Wednesday afternoon, ending months of questions about how Labor’s measures will hit “working people” hard and the extent to which the government intends to borrow to support long-term investment speculation.

Prime Minister Keir Starmer warn Now is the time for the world’s sixth-largest economy to “accept the acid test of fiscal reality” and make “tough decisions” to avoid falling into a downward trajectory.

Reeves is reportedly considering a sin tax raid amid a raft of measures including major changes to government fiscal rules.

These taxes are regularly increased in government budgets and typically refer to taxes on harmful goods such as alcohol and cigarettes, as well as the gambling industry.

Analysts say that while sin taxes may play an important role in the budget, raising billions of pounds in revenue, they alone will not plug the so-called “black hole” in the country’s public finances.

“Sin stocks are a good place to start,” Michael Field, European market strategist at Morningstar, told CNBC via video call. “People would think they’ve been taxed and forgotten about, but there’s always an opportunity.” Rinse them further.

“I think governments may view them as low-hanging fruit because there’s no one to protect them, but you have to be wary of killing the golden goose at the same time – and the consequences of the black market, if indeed the industry can’t operate profitably in a law-abiding way.”

Gambling may be one of the evil industries targeted by Labor. The Guardian report On October 11, unnamed sources familiar with the discussions were quoted as saying that the Treasury was considering a new tax that could raise between £900 million ($1.17 billion) and £3 billion.

Shares of London-listed gambling stocks fell sharply after the news broke. UK-based Entain, which owns brands including Ladbrokes and Coral, closed down around 8% on October 14, while William Hill owner Evoke also fell More than 14%.

Listed in the United States flutterThe company, which owns Betfair and Paddy Power and debuted in London, also saw its share price plummet after the report.

In addition, it is said that the Labor Government meditation Increase taxes on e-cigarette products while increasing cigarette taxes.

british government declare Last week it emerged that the UK was planning to ban the sale of disposable e-cigarettes in England starting next summer. The use of e-cigarettes soared by more than 400% between 2012 and 2023, the Department for Environment, Food and Rural Affairs said on Thursday, noting that 9.1% of the British public now use these products.

Asked about the prospect of sin taxes in the budget, a Treasury spokesman told CNBC: “We do not comment on speculation on tax changes outside of fiscal events.”

Bruce Morley, a lecturer in economics and finance at Britain’s University of Bath, said Wednesday’s budget was likely to target the criminal industry, adding that the move was likely to have broad public support and ultimately raise billions of dollars in tax.

Morley said the gambling industry “could be a major target” and higher taxes on tobacco products, including e-cigarettes, would benefit tax revenue and public health.

“Currently, e-cigarettes are only charged the standard 20 per cent VAT rate but, unlike tobacco, are not taxed separately. This may change the budget, especially following concerns about the health (effects) of e-cigarettes on young people,” Morley passed email told CNBC.

“However, the amount raised by the tax on sinful products is not enough to cover the amount the government hopes to raise, so other less popular taxes will also have to be increased significantly,” he added.

Asked how tax hikes targeting the gambling and tobacco industries might impact the stock market, Morningstar Field said some of the negatives were already priced in to some extent, especially given concerns about what might be included in Wednesday’s budget. Strong speculation about the content.

For tobacco giants, e.g. imperial brand and british american tobacco plcField said the stocks appear to have “fell significantly in price relative to what we think they should be worth, but at the same time, I think the market is still a little bit skeptical about the regulatory environment for e-cigarettes.”