As someone who's worked for HMRC for a number of years, I can give you another factor to throw into the mix:
The black market in smuggled fags is massive and getting bigger. It means that many are smoking these things, not paying tax on them and undoubtedly using the health service to sort out their subsequent smoking related illnesses. According to our research, based on what we think does get through after we look at our stats on successful busts, this is now significantly contributing to smoking related drains on the NHS.
It's also what bugs me in arguments over the effect of smoking in society when the pro-cig people say their fag taxes easily cover the cost of NHS treatments.