A report released by Policy Exchange calls for a 5% tobacco tax hike. It also suggested that money be raised to reward expectant mothers who give up smoking. The reward amount recommended is £10 per week.

The tax would increase the price of cigarettes by £1.29 raising it to an average of £7.42.

The think tank is of the opinion that the levy is justified because the money accruing from the sale of cigarettes was £10 billion each year while the habit cost the state £13.74 billion. This leaves an amount of 6.5p per cigarette to be met by the taxpayer. This breaks the common myth that smoking is profitable for the economy.

The increase in tobacco tax will help in leveling the disparity between income and cost that the state has to bear.

Henry Featherstone, head of Policy Exchange's health and social care unit, said, "Targeted action like this would help reduce England's growing health inequalities, whereby those on lower incomes suffer more ill health, which can largely be attributed to smoking".

Featherstone is hopeful that the tax will be levied when the new budget session commences.