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Wednesday 1 October 2014

Regulation plan for tobacco sales

Published 05/09/2013 | 13:56

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Health chiefs have called for tougher regulation of tobacco sales to force cigarette companies to pay more tax.

Health chiefs have called for tougher regulation of tobacco sales to force cigarette companies to pay more tax.

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The Irish Heart Foundation and Irish Cancer Society claim the profits of multinationals could be targeted if prices were set by an independent body.

And they said the initiative could claw an additional 65 million euro in tax from tobacco giants if the Government moved to regulate prices.

Chris Macey, of the Irish Heart Foundation, said it was bizarre that Ireland has regulators for everything from energy to taxis but nothing for a product that kills half of its users.

"There is no legitimate argument for the status quo because even apart from the health catastrophe of 5,200 people killed by tobacco-related illness a year in Ireland, the tobacco industry is a drain on the nation's economy," he said.

"It creates virtually no employment and on Department of Health estimates the taxpayer is subsidising tobacco companies to the tune of almost six euro for every euro of profit they take out of the country."

The health charities have called for a cap on the maximum cost of a packet of cigarettes which is lower than the current price when the tax and duties are not added. The Government would then be required to step in and increase tax on the tobacco to off-set the difference.

The idea is being examined in the UK, New Zealand and Australia.

UK business economist Dr Robert Branston, who is promoting the plan, said the result would be more tax for the state and lower profits for tobacco multinationals.

"Tobacco multinationals can continue to charge premium prices and make excessive profits because their products are very cheap to make, are highly addictive and competition in such a highly regulated market is so limited," he said.

"This extreme profitability creates the incentive and ability for tobacco companies to fight tobacco control measures to the detriment of public health."

The charities' joint pre-budget submission also called for annual tax increases on tobacco of 5% above inflation - a move that would lead to a 60 cent increase on a pack of cigarettes this year.

Dr Branston, deputy director of the centre for governance and regulation at the University of Bath, said his research shows tobacco firms enjoy profit margins of up to 55% after duties on sales in Ireland - about three times the profits of food and drinks manufacturers.

He said smoking-related illness is costing the state two billion euro a year, compared with total tobacco tax receipts in 2011 of 1.42 billion euro.

Kathleen O'Meara, of the Irish Cancer Society, said: "By combining higher taxes, tough anti-smuggling measures and improved smoking cessation services, we can achieve the win-win of a major reduction in smoking rates and huge extra revenue for the Exchequer."

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