UK's Opposition Labour Party Pledges Tobacco Levy If Wins Power Next Year

Britain's opposition Labour party said on Tuesday it would introduce a U.S.-style “sin tax” on tobacco firms if it wins a national election next year, sending shares in the leading cigarette groups lower on the day.

Labour leader Ed Miliband made the pledge in a speech to his party's annual conference which he hopes will help him persuade skeptical voters he is prime ministerial material and can win power next May.

“We will raise extra resources from the tobacco companies who make soaring profits on the back of ill health,” Miliband told party activists.

The tax, would be based on firms' market share and would aim to raise at least 150 million pounds ($245 million), the party said in an advance briefing note.

Shares in British American Tobacco and Imperial Tobacco were both down by 1.7 percent, although shares in both companies had already been trading lower as the broader FTSE 100 index fell 1.4 percent.

Big tobacco companies are already at odds with the British government over plans to implement a law requiring tobacco products to be sold in plain packaging with graphic health warnings and no branding.

The government said in April it was prepared to move forward with the plan, aimed at reducing the lure of smoking for young people. It published draft regulations in June and finished a six-week consultation in August.

Philip Morris has said it is prepared to sue the government should it move forward with such a law, whose implementation in Australia has led that country to face challenges at the World Trade Organization.

Labour are narrowly ahead of Prime Minister David Cameron's Conservative party in the polls, after a lead of up to 10 percentage points slipped over the last 12 months. A YouGov poll released before Miliband's speech on Tuesday put support for Labour at 35 percent against 33 percent for the Conservatives.

REUTERS