P&R wants a 13.3% increase on tobacco

Increasing the price of tobacco products has helped reduce smoking in Guernsey and Alderney from more than 30% of people in 1988 to 13% in 2018.

Health & Social Care recommends a 10% real-terms increase in the excise duty on tobacco, noting that while the price of tobacco was high, locally it was relatively low compared to the UK.

Based on an inflation forecast of 3.3%, P&R is recommending an increase in excise duty on all tobacco products of 13.3%. This would increase the excise duty on an average packet of 20 cigarettes from £8.57 to £9.71.

The 2026 Budget for excise duty revenue on tobacco is estimated at £8.4m., which reflects a combination of increased duty and reduced demand.

During the review, P&R noted that during the travel restrictions imposed in 2020 and 2021, revenue from tobacco products increased by approximately £5m. This has been linked to the lack of access to duty free.

So P&R is recommending that the Assembly endorse a review of the duty-free allowances for tobacco products, with proposals to be made in the 2027 Budget. Fuel and alcohol duties are also set to increase.

Duty on alcohol is set to rise in line with inflation – equating to an extra 1.7p per pint of beer.

Policy & Resources consulted with Health & Social Care, which has suggested a real-terms increase of 3% to alcohol duty for 2026 and suggested changing how duty is calculated to instead be done by litre of pure alcohol.

Economic Development, after consulting local alcohol producers and industry groups, wanted to see alcohol duty rates frozen.

Having considered the different arguments and noting that the alcohol duty rates were frozen in 2025, the P&R recommended an increase of RPIX on alcohol duty rates for 2026. Fuel duty will rise by RPIX+1% – about 3.7p per litre of petrol.

Environment & Infrastructure is still investigating whether to introduce distance charging and a vehicle tax. P&R has pledged to work with E&I on the plan.