News & Comment

Fair's fair – time to give Ireland's smokers a (tax) break, says Forest

Mon 17th September, 2018

BUDGET 2019 – Forest Ireland wants Finance Minister Paschal Donohoe to freeze excise duty on tobacco to reduce the “unfair” level of tax on the nation’s smokers.

Quoting the Tax Strategy Group’s General Excise Paper (July 2018), the lobby group Forest Ireland points out that:

  • As of January 2018, Ireland has the highest rates of duty on tobacco products, including on cigarettes and roll-your-own (RYO) tobacco in the EU.

  • Excise duty on tobacco products has increased in 22 of the last 26 budgets.

  • The price of a pack of 20 cigarettes in the most popular price category (MPPC) now stands at €12.20, with a tax content of €9.56 split between €7.28 of excise duty and €2.28 in VAT.

  • The rate of duty on RYO tobacco is currently €335.342 per kilogram, or €10.06 per 30g pack.

It’s not just law-abiding smokers who suffer as a result of excessive taxation, says Forest. None-smoking taxpayers and legitimate retailers are also affected as price conscious consumers turn to the black market. According to the Tax Strategy Group:

  • The latest Ipsos MRBI survey conducted on behalf of the Revenue Commissioners and the National Tobacco Control Office of the Health Service Executive indicate that 13% of cigarettes consumed in the State in 2017 were illicit. This marks an increase from ten per cent in 2016, though there remains an overall reduction from 15% in 2011.

  • Revenue seized approximately 34.2 million cigarettes with a value of approximately €19.5m in 2017.
     
  • Recent surveys by Revenue suggest that some 9% of cigarette consumption in Ireland is accounted for by purchases abroad. Ireland currently imposes the highest level of excise duty in nominal terms based on the weighted average prices of cigarettes in the EU. There is therefore an incentive to bring in non-Irish duty paid tobacco products from member states where tobacco is significantly cheaper. 

Denouncing proposals by the Irish Heart Foundation and the Irish Cancer Society to introduce an annual TPT (typical purchase tax) escalator of inflation plus 5% on cigarettes, and increase the duty on RYO tobacco to equalise the duty with cigarettes, Forest Ireland spokesman John Mallon said:

“Smokers have been the whipping boys in successive Budgets for far too long. The current levels of tax on tobacco are immoral because they target low earners and others who can least afford the annual tax increases on tobacco. 

“Increasing the tax on RYO tobacco to bring it in line with cigarettes (FMC) is especially unfair because it’s a deliberate attempt to force people to give up one of the very few pleasures they may have.”

Calling on the Finance Minister to freeze excise duty on tobacco in next month’s Budget, he added:

“Enough is enough. It’s time for Paschal Donohoe to strike a blow for common sense and decency. Tobacco is a legal product. Smokers expect to pay a premium for what is a potentially unhealthy habit, but there is no logic in pursuing an unfair policy that discriminates against the poor, hurts legitimate retailers and costs the nation revenue that goes to criminal gangs or governments abroad.”

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