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  1. ITV Report

Almost £31.6bn in tax 'lost in black market economy'

A staged photograph of a woman drinking alcohol. Credit: PA

Almost £31.6bn of tax revenue has been lost in the illegal trade of cigarettes, alcohol and diesel, according to analysis by a campaign group.

The TaxPayer's Alliance said over the past five years, up to £13.9bn has been lost in the illicit trade of cigarettes and about £4.8bn in diesel.

The group quoted analysis from HMRC figures, and said the shortfall is so big it could fund a 1.5p reduction in the basic rate of income tax.

They also said the taxman lost out on:

£5.8bn
in the sale of beer
£3.6bn
in the sale of spirits
£3.5bn
in the sale of wine

Our ludicrously complicated, punitive tax system not only hits hard-pressed families with crippling bills but also affects frontline services by depriving the Treasury of revenue lost to the black market, all the while lining the pockets of those peddling dodgy tobacco, alcohol and diesel.

The revenue lost to the illicit trade could fund a modest but much-needed tax cut for millions of families while preventing smugglers from profiting because of deeply regressive 'sin taxes' which hit the poorest hardest.

It is high time the Government offered struggling taxpayers a better deal instead of kowtowing to the self-appointed lifestyle police who remain oblivious to the cost of ever-rising duties on ordinary taxpayers.

– The TaxPayer's Alliance

A spokesperson for HMRC said the UK tax gap - the difference between the amount due and collected - is among the lowest in the world.