With the UK Budget only a few days away, Japan Tobacco International (JTI) is calling on the Chancellor to avoid making this a "giveaway Budget" for criminals.
The tobacco supplier has warned that those involved in the sale of illegal products at the expense of legitimate sales and excise receipts could benefit unless George Osborne takes steps against smugglers.
The latest upper estimate figures from HMRC shows that, after successive above inflation duty hikes, tobacco smuggling is on the increase for the first time in many years with tax revenue losses reaching £2.9bn in 2012/13, up by £500m from 2011/12.
JTI is warning that a further duty rise will only serve to put even more money in the pockets of illegal tobacco traders.
Daniel Torras, managing director of JTI in the UK, said: “With the UK Government set to ban smaller rolling tobacco and cigarette packs, making illegal products even more tempting to smokers whose finances are already under pressure, and threatening to make counterfeiting cheaper and easier by introducing plain packaging, now is definitely not the time to add significant tax increases on tobacco and further widen the price gap between legitimate and illegal products.”