LONDON The U.K Government is expected to reveal further details this week in its pre-budget financial review of a scheme to embed RFID tags in each pack of cigarette sold in the country in an effort to stop counterfeiting and tobacco smuggling.
The scheme would allow some Revenue and Customs officials to use hand-held readers to ascertain whether each individual pack is genuine and whether duty has been paid on it. Last week, cigarette manufacturers started embedding RFID chips into each pack destined for sale in the U.K.
The U.K's Tobacco Manufactures' Association which includes the largest cigarette suppliers is helping to run the scheme in conjunction with Revenue and Customs, and initially the tobacco makers will fund the initiative.
However, a spokesperson for the TMA declined to disclose to EE Times Europe who supplies the RFID chips or readers for the scheme saying "that is proprietary information. We are not able to disclose such details at the moment".
The scheme is expected to end the expensive and lengthy test procedure to authenticate each pack that is suspected of having been imported illegally.
The TMA estimates that about three per cent of cigarettes smoked in Britain, or 2 billion, were counterfeit.
The government believes the illegal trade is responsible for £3.5 billion in lost British tax revenues per year, in addition to lost revenues of £800 million for the tobacco industry. The duty on tobacco raises about £9.5 billion a year for the Treasury.
The TMA said that counterfeiters Ė many of whom are based in China - have started to use increasingly sophisticated methods both to dodge customs agents and also to market their products
The estimated cost of implementing the scheme is expected initially to be as high as 10p a packet, although it will probably fall rapidly as the technology enters mass production.
Customs officers expect to start using the technology early next year, when old stocks of cigarettes without the RFID tags have passed through the supply chain.