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Conflicting thoughts on Budget hike in tobacco prices

The Irish Heart Foundation is calling for a €1 tax increase on a packet of 20 cigarettes in the next Budget. But Retailers Against Smuggling believe there should be no increase in excise on tobacco.

THE IRISH HEART Foundation is calling on the Government to introduce a €1 tax increase on a 20-pack of cigarettes in the next Budget.

It says that this would bring in €68 million extra receipts and a further €28 million in indirect public finance benefits.

A tax freeze on tobacco was imposed by the previous Government in the last two budgets, which the foundation says cost the state €200 million.

It also says the increase would result in 30,000 people quitting smoking in Ireland, and that as roughly one in two smokers die from the habit, this would lead to 15,000 people countrywide potentially living longer.

The claims are made in a new report, Tobacco Taxation, Smuggling and Smoking in Ireland, which was compiled by UK consultancy Landman Economics.

A report by the Research and Analytics Branch of the Revenue Commissioners claims that further tax increases would lead to a drop in tax revenue and would encourage more people to use untaxed products.

However, Landman Economics director Howard Reed said that this analysis was “out of kilter with all similar international studies”, and “the evidence provided by Irish data also showed that it was seriously flawed”.

He said that when tobacco tax rose by 11% in 2009, revenue increased by 9%.

The report concludes that further increases in tobacco taxation would also produce substantial benefits to the public finances – ranging from just under €50m per year for a 50 cent rise, €96 for a €1 hike and €165m if tax was increased by €2.

It says extra tax take would account for 70 per cent of the total, with the rest coming from indirect benefits such as reduced health service spending and reduced net spending on benefits.

Figures highlighted in the report show that after successfully lobbying for a tax freeze in 2009, the tobacco industry then put up its prices on a packet of 20 cigarettes by 13.5 cent.

In addition to a price increase in the Budget, the report recommends:

  • A Government commitment to a price escalator whereby tobacco taxes rise by a certain amount each year in future budgets
  • Expenditure on anti-smuggling operations such as enforcement and supply chain control should be increased by around €8 million per year.

Chief executive, Michael O’Shea commented:

A total of 5,700 people die every year in Ireland from tobacco related disease and illness. That’s the equivalent of two 9/11s a year on Irish soil or a jumbo jet crash every month. By seriously addressing this catastrophe the Government can make the biggest contribution to reducing avoidable death in this country for more than a generation.

Meanwhile, Retailers Against Smuggling say that the retail sector has lost at least 660 jobs in the past year, according to a survey of its 3,000 members.

The retail organisation’s annual survey, carried out by Behaviour & Attitudes, found that 74 per cent of respondents said the black market cigarette sales are harming the retail sector.

In addition, 69 per cent claim that illegal cigarettes are readily available in their area.

In contrast to the Irish Heart Foundation, Retailers Against Smuggling’s pre-Budget submission asks for no increase in excise on tobacco in the forthcoming Budget.

It also calls for:

  • The introduction of a minimum fine for cigarette smuggling and illegal cigarette selling under the Finance Act
  • Increasing fines and widening the scope of the Casual Trading Act to target markets and fairs where illicit tobacco is widely available
  • Providing Customs with more resources, including a new scanner to search for illicit tobacco consignments
  • A public awareness campaign to highlight the links between the illicit tobacco trade and other forms of organised crime.

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27 Comments
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    Mute BcuTCM0P
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    Oct 18th 2011, 3:10 PM

    Just ban the filthy things. I’m a smoker and have tried everything to give up but I always start back up. If they were banned there would be nothing surer that I’d give up if they cost 20 euro a pack on the black market.

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    Mute gary power
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    Oct 18th 2011, 3:31 PM

    Try Niquitin minis …. Work for me

    29
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    Mute BcuTCM0P
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    Oct 18th 2011, 3:45 PM

    Tried it. Even had a cop one time when I was driving trying to fine me for using an nicotine inhaler saying it was my phone. lol

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    Mute Adrian O'Donnell
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    Oct 18th 2011, 3:12 PM

    Ouch! Just as well I know a Polish fella with stacks of L&M’s… ;-)

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    Mute mart_n
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    Oct 18th 2011, 3:29 PM

    What sort of idiots are these people? Is it the revenue they’re interested in or the lives saved? I know dozens of people that now get their cigarettes from abroad because the price is too high here. Jesus christ.. they are so detached from the reality of the situation it’s scary.

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    Mute damien o'c
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    Oct 18th 2011, 4:13 PM

    Detached from reality, what’s new man!

    24
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    Mute John McHugh
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    Oct 18th 2011, 6:17 PM

    How are you surprised when the CEO of the Irish Heart Foundations qualification is ‘Commander of Irish Defense Forces’, He is not a doctor and is not qualified to lobby the government like this in my opinion.
    In his last article on this site he seemed to brush off the concept of a nanny state saying that he was all for it.
    He lacks foresight and seems incapable of looking at the macro picture of the ideas he pollutes the media with.
    He is dangerous.
    He labels people who want to take a look at the wider picture as scaremongers.
    Hopefully one day we will hold the government and lobbyists more accountable and start understanding that meritocracies within organizations both private and public is the only way we will actually get honest dialog from these ‘representatives’.

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    Mute James Stapleton
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    Oct 18th 2011, 3:30 PM

    How about implementing vouchers of a certain value on cigarette packets which can be used for treatments, hypnosis,etc!

    37
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    Mute Hanly Sheelagh
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    Nov 22nd 2011, 7:39 AM

    It doesn’t matter that this man is not a doctor, he is just putting forward Statistics from research which everyone knows is not questionable anymore. People are sick and dying from smoking and should be given every help to quit. Not tackling the black market is a problem that could be done because those selling imported cigs are well know in communities because the advertise quite openly in some areas. I gave up smoking some years ago and was a very heavy smoker at that time. I used Nicotinel chewing gum and found it very helpful.

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    Mute Joe Sixtwo
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    Oct 18th 2011, 3:50 PM

    Raining prices or tax achieves nothing, it just opens an opportunity for black marketeers. It is a stupid shortsighted strategy that has never worked. Revenue is lost to the black market and police resources are stretched chasing these people.

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    Mute Ciaran Donaghy
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    Oct 18th 2011, 3:25 PM

    ill just have to buy northern bensons and hedges even though they taste diferent

    31
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    Mute Yosser Hughes
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    Oct 18th 2011, 4:19 PM

    Been off the lung busters 3 months thank god .. Never smoked that dirt the sell along the border or markets all my friends and family do though. 34 euro per 200 as opposed to 86.50 for 200 shop bought you can see why people do !!

    27
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    Mute Julian King
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    Oct 18th 2011, 4:44 PM

    This is ridiculous, what about people on the poverty line? Some of them smoke and will never give up but will now have even less money.

    22
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    Mute Wujashtop
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    Oct 18th 2011, 5:28 PM

    Idiots then…

    24
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    Mute David Conroy
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    Oct 19th 2011, 3:34 PM

    How can this be regarded as victimising those who “will never give up”? If anyone “cannot” give up, help is available. If they “will” not give up, that’s different.

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    Mute Hanly Sheelagh
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    Nov 22nd 2011, 10:19 AM

    If they are that badly off they should exercise some discipline for their own good, the good of their health and also stop imposing their passive smoking on their families and those around them. It is one thing to say you have a right to smoke but another thing entirely if you expect people to support you in your filthy habit. People spend money needed for stuff for children for their selfish habit.

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    Mute JSLeFanu
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    Oct 18th 2011, 6:04 PM

    The double talk from the Pro-Hike side is astonishing. On the one hand they coat it in a puritanical veneer of concern for people health then a paragraph later they make the economic argument that the TAX hike would bag a load more swag for the revenue. If there’s a serious belief that hiking the TAX results in serious net benefits for health then they should be arguing that the tax hikes will result in lower tax takes because the disincentive of higher pricing is working.

    So make up your mind people, is this about health or is it about revenue because the tales you’re spinning are contradictory and self defeating. If this is really about health what they’d do is tax the things into the ground at about €60 a pack. They won’t do that because they want to keep the habit just within enough peoples grasp so they can pick their pockets for more cash. Puritanism on its own is rather unappealing but blended with hypocrisy it’s a toxic brew indeed.

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    Mute OccupyForFairness
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    Oct 18th 2011, 7:04 PM

    well said!

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    Mute David Conroy
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    Oct 19th 2011, 3:43 PM

    I think those who want health benefits would just ban the damned things, but people are pragmatic enough to know that we don’t have the resources to enforce prohibition, so they settle somewhere in the middle, like taxing them. That way at least our health service isn’t taking all the hit for treating the effects.

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    Mute Hanly Sheelagh
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    Nov 22nd 2011, 4:01 PM

    That is crazy talk; taxing cigarettes makes them more expensive and if that helps people to smoke less it is good for ones health. This judging and moralising is more on the side of those who don’t know what they are talking about.

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    Mute Jonathan Rainey
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    Oct 18th 2011, 4:49 PM

    The gardai do nothing about business selling them illegally. My friend owns a small shop – general store – and sells genuine cigarettes. The pub a few doors up is the local “black market” for them. He has reported it several times to the Gardai, raised it with his TD and nothing happens. Its never been raided once. This business is in Co Meath/Co Cavan border.

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    Mute BcuTCM0P
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    Oct 18th 2011, 5:08 PM

    It amazes me that you never hear about the Gardai catching the lads selling them on Moore street even though everyone knows you can buy them cheap there.

    19
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    Mute Barbered Ennistymon
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    Oct 18th 2011, 8:15 PM

    As a skinny white guy would it be possible to stick a Euro on each order in a fast food outlet or would that just be politically incorrect?

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    Mute James Doyle
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    Oct 18th 2011, 7:10 PM

    Main news today I couldn’t stop laughing,price of drink and alcohol to go up to make us all stop,some doctor calling us a nation of fatties,banks politicians saying were all payin back every last cent in our mortgages back,what a country!!!!

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    Mute Cormac Flanagan
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    Oct 18th 2011, 6:25 PM

    While I don’t think taxes should be raised on cigerattes sone of the arguments against the tax are laughable. If the government slashed the tax on it by 50% or more then the ones sold on the black market would also decrease so people will always buy them. And of your poor and want to smoke well then that’s your own problem. Which is more important feeding your child and smoking.

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    Mute JSLeFanu
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    Oct 18th 2011, 7:16 PM

    Your argument presupposes that people always act rationally, as a brief survey of the wreckage once known as Ireland shows, they don’t. This is another claim on peoples money dressed up in the rags of concern for health.

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    Mute Kelly McCarthy
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    Oct 18th 2011, 3:55 PM

    Use some of the extra â

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