Cigarette smugglers will forfeit their cars

Every motorist in Britain is to be warned that they risk losing their car and their driving licence if they smuggle cigarettes from abroad, the Government will announce today.

Every motorist in Britain is to be warned that they risk losing their car and their driving licence if they smuggle cigarettes from abroad, the Government will announce today.

More than 20 million car owners will be sent leaflets outlining the tough penalties in a hard-hitting campaign to tackle the £2.5bn a year trade. Dawn Primarolo, the Paymaster General, will unveil the new measures on a visit to Dover today to ensure that no would-be smuggler can claim ignorance of the sanctions.

Under the scheme, the DVLA will send out the list of penalties, ranging from driving disqualification through to seven years' imprisonment for the most serious cases. Off-licence traders will also be warned that they risk losing their liquor licence and the right to a national lottery machine if they are found smuggling tobacco.

The campaign comes as Gordon Brown is expected to introduce new measures in the Budget next week in a further crack down on the illegal trade. In a bid to stem the problem, the Chancellor may signal plans to stamp the country of origin on cigarette packets and tobacco pouches. This would allow Customs and Excise to identify and seize illegal imports more easily and to prosecute those selling them. Tighter security at ports and tougher sentences could also be reviewed.

Revenue lost to the Treasury through tobacco smuggling is expected to have totalled £2.5bn last year, up significantly on the £1.7bn lost in 1998. The scale of the illegal operations from the European Union, where prices are roughly half those in the UK, has been blamed for flooding the market with cheap cigarettes and causing a rise in the number of smokers for the first time in years.

In the early 1990s, just 3 per cent of tobacco in Britain was smuggled, but that figure has risen to about 10 per cent today. The black market has been so successful that Customs officials fear that up to one in five cigarettes in the UK will be smuggled within the next couple of years.

Much of the trade is carried out by organised crime gangs who see tobacco smuggling as a safer and more profitable alternative to drug smuggling. British gangs make frequent trips to France and Belgium, where warehouses can legally sell tobacco for a quarter of the UK price.

However, the Treasury is also worried about the rise in the number of individuals who are using trips to the Continent to bring in large quantities of cigarettes for personal use. Smugglers pay £1.60 for a 50g pack of tobacco that costs £7.45 in Britain. Hawkers in markets and pubs sell duty-free cigarettes at £2.50 a packet.

Mr Brown promised last November in his pre-Budget report that all future cigarette price rises would go directly to the NHS, a landmark switch to so-called hypothecated taxation. But he may avoid an increase in duty this year to stem the smuggling problem.