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Since October 1, radio frequency tags have been embedded in each packet of cigarettes produced for sale in Britain. The technology will allow HM... Every cigarette packet sold in Britain is to contain a microchip under a new scheme launched last week designed to combat tobacco-smuggling and counterfeiting.

Since October 1, radio frequency (RFID) tags have been embedded in each packet of cigarettes produced for sale in Britain. The technology will allow HM Revenue & Customs officials to use hand-held electronic devices to determine whether an individual cigarette packet is bootleg or genuine and whether or not duty has been paid on it.

"The scheme provides an instant authentication method", said a spokesman for the Tobacco Manufacturers' Association (TMA), which is helping to direct the project with the Government. He added that it would end the existing expensive and lengthy process of sending suspect cigarette packs to a laboratory in order to determine their authenticity.

The TMA said that in 2006, about two billion counterfeit cigarettes were consumed in the UK, nearly 3 per cent of the 67.5 billion total. The illegal trade in cigarettes is blamed 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 – 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. For example, health warnings on counterfeit packs are deliberately printed in Polish and other Eastern European languages to fool UK buyers into thinking that they are buying smuggled tobacco, rather than counterfeit goods.

Most of the cost of the anticounterfeiting scheme is being met by Britain’s four main cigarette manufacturers: British American Tobacco, the owner of Lucky Strike; Philip Morris, the owner of Marlboro; Imperial Tobacco, which owns Superkings and Embassy; and Gallaher, which is the owner of the Silk Cut and Benson & Hedges brands.

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.

The Government agreed to back the scheme this year.

Customs officers will be unable to start to use the technology until some time next year, when old stocks of cigarettes without the RFID technology have passed through the supply chain.