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Cigarette prices likely to fall after EU court ruling

Anger as lobbyist warns decision will encourage smoking

Ed Carty and Aideen Sheehan

Published 05/03/2010 | 05:00

CIGARETTE prices are set to drop after European judges ruled that state-controlled minimum pricing is illegal.

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The European Court of Justice (ECJ) found laws in Ireland, France and Austria imposing floor prices on tobacco undermine fair competition.

The Irish Cancer Society said the ban by the Luxembourg-based court could bring down the cost of cigarettes and encourage smoking.

Kathleen O'Meara, the charity's head of advocacy and communications, called for the Government to act quickly to protect public health policy.

"They must continue to maintain high prices by increasing tax on cigarettes and loose tobacco," she said.

"Second, they must bring in legislation immediately to prohibit tobacco manufacturers from selling. . . at a loss."

Irish cigarettes retail at around €8.40 a pack for a premium brand and are by far the most expensive in the EU, followed by the UK at €6.94.

The Government takes around €6.70 of that in excise duty and VAT.

Anti-smoking lobby group ASH Ireland said price was the single most important factor in getting people to quit.

Dr Angie Brown said: "Ireland has and is permitted to have a separate tax regime to all other EU countries -- and it is our view that the Government has every right to apply taxes which ensure that tobacco is sold at current and even higher prices.

"Price is well established as the most important measure in encouraging smokers to quit and discouraging young people from starting to smoke and we must always bear this in mind when legislating on tobacco price.

"Smoking kills 7,000 people in this country each year and costs the Exchequer over e1bn in treating tobacco-related illness and disease -- and we must ensure than neither of these alarming statistics is increased," Dr Brown added.

Smuggling

Tobacco and cigarette smuggling has become a massive black market money-spinner for crime gangs in the last few years. It is estimated that up to a quarter of cigarettes smoked in Ireland are illegal.

Toby Granwal, general manager of PJ Carroll, Ireland's oldest tobacco company, argued that setting minimum prices for cigarettes was irrelevant.

"Packs of cigarettes are being purchased up and down the country for as little as e3.50 on the black market. This is under half the current minimum price," Mr Granwal said.

He claimed the State lost more than €500m in revenue last year because of the illicit tobacco trade.

Mr Granwal also hit out at the high excise duties already imposed on tobacco.

"Unless the Government were to significantly revise the tax level to help reduce the smuggling problem, with or without a set minimum price, the cost of an Irish packet of cigarettes is still going to be the most expensive in the EU because of the high tax."

Jan O'Sullivan, Labour's health spokeswoman, said the ECJ ruling was competition law gone mad.

"Competition law is all well and good, but when it starts to get in the way of reasonable measures, which are put in place in the greater public interest, it is clear that something has gone wrong," she said.

Fine Gael justice spokesman Charlie Flanagan said growing cigarette smuggling was undermining all efforts to reduce smoking while fuelling dissident republican and gangland activity.

The Health Department said it was examining the court judgment to consider its implications.

The department said it has set minimum prices on cigarettes since 1978 to prevent the use of price as a sales promotional device.

Irish Independent

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