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Saturday 2 August 2014

Health versus revenue is State's quandary on tobacco

Colm Kelpie

Published 30/01/2013|05:00

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WITH people here going through 5.5 billion cigarettes in 2011, smoking is a lucrative habit for the Government.

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But this poses all sorts of difficulties for the Government. Finance Minister Michael Noonan and Jobs Minister Richard Bruton are under fire after it emerged that officials from both departments held talks with representatives of the tobacco industry ahead of the Budget.

Labour MEP Nessa Childers hit out at the ministers this week for not disclosing the meetings.

But how important is the industry to the State in revenue terms, and how much does the hard-pressed taxpayer have to pay to treat the health consequences associated with the habit?

Figures from the Revenue Commissioners show that almost 80pc of the price of a €9.30 packet of cigarettes goes to the State through VAT and excise duty.

Lobby group the Irish Tobacco Manufacturers' Advisory Committee (ITMAC) has highlighted that Ireland has one of the highest rates paid for cigarettes in Europe, surpassed only by the UK and Norway.

The high cost has perhaps boosted the black market trade in the country as smokers turn to cheaper, smuggled alternatives.

Revenue estimates that in 2011, about 14pc of the cigarettes consumed were contraband, leaving the State with a loss of about €258m in excise and VAT.

The State is fighting to clamp down on the smugglers, with authorities having perhaps their most successful operation in October 2009, when up to €50m worth of cigarettes were seized in Greenore in Co Louth.

Seizures last year totalled 8,108, down on the 2011 figure of 10,581.

Budget 2013 saw 10 cent slapped on the price of a packet of 20 cigarettes despite lobbying by groups such as the ITMAC that costs were high enough.

But on the other side of the board, the cost of treating tobacco-related illness is considerable, and the money paid out by the State in addressing the health consequences must be recouped. Worrying findings from an EU survey last year found Irish smokers and ex-smokers took up the habit at a younger age than their European counterparts.

Ash Ireland, which has the aim of reducing tobacco use, says that 5,500 Irish people die from the effects of tobacco-related diseases every year, estimating the annual cost for treatment at a staggering €1.5bn.

Ash criticised the Government for not increasing cigarette prices higher than it did in the Budget, stating that an extra 10 cent would have little impact on the prevalence of smoking. It wanted a 60-cent jump.

Ireland took the tough decision to have a nationwide ban on smoking in the workplace in 2004, and reports state a ban on smoking in cars with children could be enacted by the end of the year.

But trying to please both sides in the smoking debate is a difficult one for decision-makers.

Irish Independent

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