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LONDON (Reuters) - The British government said on Wednesday it would not introduce a levy on tobacco manufacturers and importers as a consultation had shown the cost would simply be passed on to consumers.
Last December, the government said it was considering introducing a levy, which would have been based on market share, and launched a consultation to gather views on the idea.
"Analysis of the responses shows that the impact of a tobacco levy on the tobacco market would be similar to a duty rise, with tobacco manufacturers and importers passing the levy onto consumer prices," the government said in its budget.
"As tobacco duties have already increased this year and will continue to increase by more than inflation each year in this parliament, the government has decided not to introduce a levy on manufacturers and importers."
The government said its analysis had shown a levy of 150 million pounds would only have raised 25 million pounds after behavioural effects were accounted for.
Big tobacco companies, such as Philip Morris International (PM.N), British American Tobacco (BATS.L), Japan Tobacco International (2914.T) and Imperial Tobacco IMT.L, are already at odds with the British government over plans to require plain packaging of tobacco products.
Reporting by Kylie MacLellan; editing by Stephen Addison