Smokers, drinkers are spared hike in excise duty
Published 08/12/2010 | 05:00
SMOKERS and drinkers breathed a sign of relief as the Government refused to hike the price of alcohol and cigarettes.
But the price of both will increase in 2013 when the planned 1pc VAT hike is introduced, bringing the rate to 22pc. A further 1pc will be added in 2014.
Last year Brian Lenihan cut the excise duties on alcohol to 20pc -- the first cut since 1994 -- in an attempt to stem the flow of shoppers going to Northern Ireland to stock up.
However, tax and currency changes mean shoppers are no longer travelling, removing the incentive to cut excise again.
This means the average packet of cigarettes will remain at €8.50. This includes €5.22 in excise duty and €1.48 in VAT, bringing the total tax to €6.70.
Excise of €3.25 is currently applied to every litre of spirits, along with 21pc VAT. A pint of beer has 37 cents in excise duty, with VAT applied afterwards. One litre of wine has a bill of €1.97 of excise with VAT additional afterwards.
Last night vintners raised a cautious glass to the decision not to raise taxes on alcohol.
But anti-smoking groups said the Government "missed an opportunity" by keeping the price of cigarettes steady.
Professor Luke Clancy of anti-smoking group ASH said it was "incredible" that the Government had opted not to increase the levy on tobacco at a time when they desperately need to raise revenue. "It's crying out to be raised," he added.
He rubbished arguments that hiking the taxes leads to an increase in smuggling.
"If cigarettes are €8.50 and they go up 20, 30 or even 50 cent, it's not going to matter to smuggling. That's not going to be a greater incentive."
He said that the price is "all about whether we want to collect taxes".
"They've done everything else wrong so I suppose I'm not really surprised about this."
Earlier this year the Irish Independent revealed that tax receipts from tobacco rose to a record €1.2bn last year, with more expected to be collected this year. Revenue from tobacco sales has increased every year for the past decade, regardless of price increases.
Kathleen O'Meara of the Irish Cancer Society pointed out that up to 50 young people begin smoking each day.
Meanwhile vintners gave a cautious welcome to the decision to keep excise duties and tax on alcohol steady.
But they said more needed to be done to help the pub industry, which is suffering as more people drink at home.
Hugh Hourican, owner of the Boar's Head Pub on Dublin's Capel Street, said he is "happy" with the price freeze but said excise needed to be put on alcohol sold in off licences and supermarkets.
"I went out on Saturday to buy some Jameson because we were running low," he said.
"I got two bottles from my supplier for €37. But if I'd gone to Dunnes Stores I'd have bought them for €30.
"People are now going straight from their apartments to the nightclub."